EU regulation would significantly reduce Ethiopia’s growth- Study --[Reported by Umva mag]

European Union Deforestation Regulation (EUDR) would significantly reduce Ethiopia’s both exports and imports, along with a decrease in government revenue, a study by Overseas Development Institute (ODI) has revealed.

ODI, a prominent global affairs think tank based in London, in its recent study forecasts that the EUDR, set to take effect on 30 December, 2024, will have significant economic repercussions for Ethiopia.

The study, titled “Avoiding a Green Squeeze”: Surrounding Least Developed Countries in Navigating New Greening Trade Measures” revealed that in the most severe scenario—a complete halt of exports to the European Union—Ethiopia could face a notable economic downturn.

Specifically, the country might experience an 18.4% decline in total exports, a 5.8% decrease in imports, a 3.3 percent loss in public revenue, and a 0.6 percent reduction in GDP.

As noted by the study’s authors, “such a scenario would likely exacerbate poverty and inequality within Ethiopia, hindering its progress toward achieving its development objectives.”

The ODI emphasises that while the global pursuit of a more sustainable future is commendable, it is fundamentally reshaping international trade dynamics and presenting new challenges for developing economies such as Ethiopia.

The organisation cautions against a potential “green squeeze” on the world’s most vulnerable nations, where well-intentioned climate-related trade policies may inadvertently impede their economic development.

The European Union constitutes a significant market for Ethiopian coffee, absorbing over a third of the annual shipments sent abroad.

However, the ODI emphasises that novel regulations, such as the EUDR, may lead to substantial disruptions within supply chains.

MG/as/APA

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