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Real GDP (2001): $680 million.
Annual growth rate (2001): 5.1%.
Per capita income: Less than $200 per year. On a purchasing power parity basis, $750.
Avg. inflation rate (CPI, Asmara, end of period): 7.7% in 2001.
Mineral resources: Gold, copper, iron ore, potash, oil.
Agriculture (18% of GDP in 2001): Products--millet, sorghum, teff, wheat, barley, flax, cotton, papayas, citrus fruits, bananas, beans and lentils, potatoes, vegetables, fish, dairy products, meat, and skins. Cultivated land--10% of arable land.
Industry (22.3% of GDP in 2001): Types--processed food and dairy products, alcoholic beverages, leather goods, textiles, chemicals, cement and other construction materials, salt, paper, and matches.
Trade: Exports (2001)--$147 million: skins, meat, live sheep and cattle, gum arabic. Major markets--Middle East, Europe (Italy), and Sudan. Imports (2001)--$523 million: food, military material, and fuel, manufactured goods, machinery and transportation equipment. Major suppliers--Saudi Arabia, Italy, U.A.E. and Sudan.
The Eritrean economy is largely based on agriculture, which employs 80% of the population but currently may contribute as little as 18% to GDP. Export crops include cotton, fruit, hides, and meat, but farmers are largely dependent on rain-fed agriculture, and growth in this and other sectors is hampered by lack of a dependable water supply. Worker remittances from abroad currently contribute 27% of GDP.
The Government of Eritrea states that it is committed to a market economy and privatization, and it has made development and economic recovery its priorities. Nevertheless, the government and the ruling PFDJ party play pervasive roles in the economy. The government has imposed an arbitrary and complex set of regulatory requirements that discourage investment from both foreign and domestic sources. The economy was devastated by war and the misguided policies of the Derg, which disrupted agriculture and industry. The more recent war with Ethiopia also has had a major, negative impact on the economy and further discouraged investment. Eritrea lost many valuable economic assets in particular during the last round of fighting in May-June 2000, when a significant portion of its territory in the agriculturally important west and south was occupied by Ethiopia. As a result of this last round of fighting, more than one million Eritreans were displaced. According to World Bank estimates, Eritreans also lost livestock worth some $225 million, and 55,000 homes worth $41 million were destroyed. Damage to public buildings, including hospitals, is estimated at $24 million. Much of the transportation and communications infrastructure remains outmoded and deteriorating. As a result, the government has sought international assistance for various development projects and has mobilized young Eritreans serving in the National Service to repair crumbling roads and dams.
Small businesses, such as restaurants, bars, Internet cafes, stores, auto repair shops, and crafts thrive in the Asmara area. A brewery, cigarette factory, small glass and plastics producers, several companies involved in making leather goods, and textile and sweater factories operate in the Asmara area. The textile and leather industries have made a partial recovery since independence. Most local industries rely on outmoded technology and suffer from a lack of capital investment.
In Massawa, the port has been rehabilitated. In addition, the government has begun to export fish from the Red Sea to markets in Europe and elsewhere. A newly constructed airport in Massawa capable of handling large jets could facilitate the export of high-value perishable seafood. Also in Massawa, in 2001, Seawater Farms Eritrea began to export shrimp to Europe and the Middle East. The farm is a joint venture between a group of international investors based in the United States and the Eritrean navy. It is an integrated project designed to grow shrimp, tilapia, and salicornia (a succulent that can be irrigated with seawater), and to foster the growth of mangrove wetlands. The project is expected to generate exports as well as employment opportunities for Eritreans. The investors also intend it to serve as the model for a new kind of sustainable, ecologically friendly, yet profitable operation.