Editing Economy of Eritrea (section)

==Economic history==
Eritrea's recent economic growth has been characterised by considerable volatility, partly due to its dependence on predominantly rainfed agriculture, which accounts for about one-third of the economy. The sector is also affected by distribution services, which account for about 20 per cent of GDP, and mining, which accounts for another 20 per cent of the economy. Real GDP growth is estimated to have recovered to around 12% in 2018, after an average contraction of -2.7% between 2015 and 2018, caused by frequent droughts and lower mining output.<ref name=WB>{{cite web |title=Eritrea Overview |url=https://www.worldbank.org/en/country/eritrea/overview#:~:text=In%20recent%20years%2C%20Eritrea%20has,11%25%20of%20GDP%20in%202018. |website=World Bank |date=2021-10-07 |access-date=2025-02-09}}</ref>

Reported inflation in Eritrea was negative between 2016 and 2018, following the exchange of currency in circulation in November 2015, which led to a contraction in the money supply. Deflation persisted in 2018, as increased trade with Ethiopia exerted additional downward pressure on prices.<ref name=WB/>

In recent years, Eritrea has pursued a tighter fiscal policy to address persistent deficits that emerged after the intensification of regional instability in 1998. By 2018, the country recorded a fiscal surplus of about 11 % of GDP, mainly due to significant reductions in capital expenditures and the introduction of some revenue-raising measures. However, current fiscal pressures, including recurrent and labour-related expenditures, are expected to increase.<ref name=WB/>

Short-term growth prospects remain challenging due to fiscal constraints and limited opportunities under existing restrictions. The recovery in the agricultural sector is expected to slow. Eritrea continues to face a difficult macroeconomic environment, characterized by an unsustainable debt burden—including arrears to the World Bank—as well as vulnerabilities in the financial and external sectors.<ref name=WB/>