Ethiopia's Macroeconomic Growth Narrative: Diversifying the Economy by Harnessing the Potential of Forest Products

Abstract

Over the past two decades, Ethiopia has achieved an impressive average GDP growth rate of over 7% annually, primarily driven by infrastructure development, agricultural modernization, and industrial expansion. Despite this macroeconomic growth shaped by state-led investments, structural reforms, and changing global dynamics the forest sector represents a significant but underutilized opportunity, contributing less than 4% to GDP. The main objective of this paper is to analyse the Ethiopian macro economy by leveraging the potential of forest products. The study utilized secondary data sources from international databases, including the World Bank, IMF, UNCTAD, and the African Development Bank. Advanced analytical tools were employed to deepen the analysis and enhance visualization. Additionally, Excel was used for data visualization, creating clear and engaging graphs and interactive dashboards to illustrate key findings. The results indicate that, despite Ethiopia's sustained macroeconomic growth, the forest sector remains underutilized and holds potential for enhancing economic growth and sustainability. Furthermore, international trade in forest products reached $270 billion in 2022, underscoring Ethiopia's untapped potential. By integrating forest products into the broader economic framework, Ethiopia can align with global commitments to green growth while addressing local challenges such as unemployment and rural poverty. Effective policy interventions such as public-private partnerships, improved forest governance and incentives for green technologies are essential for ensuring sustainability and profitability in this sector.