Eritrea: Economic Outline

Economic Indicators

Eritrea is one of the world’s most closed countries. It was already facing a very difficult economic situation due to chronic droughts, a steep decrease in remittances from the diaspora, autarkic policies and past tensions with Ethiopia when it was hit by the outbreak of the COVID-19 pandemic and a locust invasion. In 2022, Eritrea experienced a slowdown in real GDP growth, estimated at 2.3% compared to 2.5% in 2021. This deceleration was partially attributed to the repercussions of Russia's invasion of Ukraine, particularly affecting energy, fertilizer, and food prices. Notably, Russia and Ukraine collectively supply nearly 100% of Eritrea's wheat imports, while oil comprises 71% of the country's energy consumption. Despite this, growth in 2022 was primarily driven by the industry and services sectors on the supply side, coupled with private consumption and investment on the demand side (data African Development Bank). Real GDP growth in 2023 is estimated to have remained relatively stable at 2.6%, supported by the construction progress of the Colluli potash project. The World Bank forecasts growth at 2.8% in 2024.

Despite a 24% decrease in global zinc prices in 2023, Eritrea experienced higher export revenues due to relatively high prices for gold and copper. Additionally, reduced imports of fuel and food further supported this trend. As a result, the current account surplus remained above 14% of GDP. Meanwhile, robust mining export revenues have additionally bolstered government earnings. As of the end of 2023, public debt was estimated to be around 219% of GDP, with almost 80% attributed to domestic banks. Eritrea is currently in a state of debt distress, and by January 2023, it had reached a pre-decision point in the Highly Indebted Poor Countries (HIPC) list. A gradual fiscal consolidation, coupled with consistent robust mining sector earnings, is expected to contribute to a reduction in the fiscal deficit to 4% of GDP by 2024. This trend of fiscal consolidation is anticipated to persist over the medium term. The ongoing economic recovery is projected to facilitate a decrease in the public debt-to-GDP ratio, from 211% of GDP in 2024 to 189% of GDP by 2026 (World Bank). In 2023, inflation eased to slightly over 6%, primarily attributed to the decrease in global food and energy prices. This moderation provided some relief for households, with an expected decrease to 5% this year. There are notable downside risks to the outlook, including potential declines in global or Chinese demand for Eritrean commodity exports, along with fluctuations in metals and minerals prices. Production delays at the Colluli mine, spill-over effects from the conflict in Sudan, and increased tensions in the Middle East are additional concerns. Furthermore, severe climate vulnerabilities may exacerbate in the future, posing a significant threat to food security in Eritrea.

Eritrea, which has not held an election since 1993, is one of the 10 poorest countries in the world. It suffers from recurring famines that affect a large portion of the population and NGOs have been banned from the country. The labour market is almost non-existent, pushing many Eritreans into the informal sector. According to the World Bank (modeled ILO estimate), unemployment rate in Eritrea was at 5.9% of total labour force in 2023. Poverty is widely acknowledged to be prevalent in Eritrea, although official national accounts and poverty statistics have not been compiled for over a decade.

Monetary Indicators	2020	2021	2022	2023	2024
Eritrea Nakfa (ERN) - Average Annual Exchange Rate For 1 GBP	19.33	20.73	18.58	18.74	19.27

Source: World Bank - Latest available data.

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Latest Update: October 2025