Eritrea is relatively open to foreign trade, which represented 47% of the country’s GDP in 2011 (World Bank, latest available data). The country signed the African Continental Free Trade Agreement. Non-tariff barriers significantly impede trade. The State maintains strict control on foreign exchange reserves, given the inability of raising foreign currency through exports or on international capital markets. Although this has reduced the gap between the official and informal exchange rates, it also has a severely negative impact on freedom of trade and the vibrancy of the country’s economic development. Eritrea imports 90% of its cereal consumption, whereas agricultural exports (mainly livestock, coffee, cotton and leather) depend on climatic conditions and the underdeveloped irrigation systems. The country mainly exports minerals (zinc, copper and gold representing 98.48% of total exports) and textile products and primarily imports machinery (16.27% of total imports), cereals (10.69%), vehicles (6.14%), electrical appliances (5.47%), wheat, iron, food preparations, rubber, furniture, plastic and medicines (ITC, 2021).
Eritrea’s main trading partners are China, India, the United Arab Emirates, Yemen, Switzerland and Liechtenstein (UNCTAD, 2021). The peace deal signed with Ethiopia in July 2018 is expected to significantly improve trade and investment in the country.
Eritrea is facing a widening trade deficit, as the country is dependent on imports for food, capital goods (which are increasing with construction projects), and oil (whose price is rising). In 2021, Eritrea’s exports of goods amounted to USD 600 million, whereas imports of goods reached USD 1.154 billion, resulting in a large trade deficit. The recovery from the COVID-19 pandemic initiated in 2021 is expected to continue, stimulated by higher mining exports.
|Foreign Trade Indicators||2017||2018||2019||2020||2021|
|Imports of Goods (million USD)||1,120||1,065||1,146||976||1,154|
|Exports of Goods (million USD)||561||669||768||556||600|
Source: WTO – World Trade Organisation ; World Bank - Latest available data.
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Latest Update: September 2023