ERITREA

RISK RATING
Severe
Default High Risk Score 9.00
Normal Average 6.15
Weighted Average 6.28
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Eritrea will use its improved relations with Ethiopia following the 2020 Tigray War to seek new commercial partnerships and secure development aid to support its own distressed economy. The increased budgetary pressures brought on by the COVID-19 pandemic will likely see Eritrea tentatively increase engagement with global markets in the coming months in an effort to boost state revenues, albeit with significant limitations and caveats. Economic relationships are likely to evolve gradually in a staggered and cautious fashion, restricted to specific sectors, and with select partners. The recent increase in military co-operation suggests that Ethiopia is foremost amongst these potential partners, indicating that the coming year is likely to see a gradual normalising of economic relations between the two states, including the regularisation of cross-border trade through Eritrea’s ports of Assab and Massawa. Eritrea’s security cooperation with Gulf States is also likely to favour the UAE and Saudi Arabia as economic partners.

  • President Afewerki‚Äôs regime faces no significant internal threats, and there are no overt indications that long-running public opposition to the state‚Äôs policy of indefinite national conscription has increased in the past year. Public discontent has typically manifested in Eritreans leaving the country and seeking asylum abroad, rather than mounting domestic protest campaigns. The security forces typically respond rapidly and forcefully to any indications of civil unrest, and there have been very few protests in recent years. Nonetheless, a sustained deterioration of socio-economic conditions is likely to provoke popular discontent in the coming year, elevating the threat of civil unrest.
  • A rapprochement with Ethiopia since 2018 was cemented by military cooperation in the 2020 Tigray War when Eritrean troops were deployed across the border to assist Ethiopian federal forces. This resulted in several Tigrayan air strikes on Eritrea, including Asmara‚Äôs airport. As the Tigray conflict shifts into a guerrilla warfare phase, Eritrea‚Äôs involvement in the conflict is likely to make it a target for terrorist attacks. The threat is highest in the immediate border area with Tigray state, where attacks are likely to focus on the Eritrean security forces. Despite Asmara‚Äôs proximity to the border, a direct attack by TPLF elements in Eritrea‚Äôs capital is a less likely scenario in the short-term, given the high degree of security in and around the city. The prospect of Eritrea increasingly siding with Ethiopia over regional security issues threatens to heighten tensions across East Africa.
  • Eritrea‚Äôs economic growth remains largely driven by mining and agriculture, which each account for some 20 percent of GDP respectively. Despite increasing investment over recent years, both sectors remain highly vulnerable to external shocks, and were hard-hit by decreased trade flows and the suppressed demand for commodities which followed the onset of the global pandemic. The government‚Äôs stranglehold over business continues to deter private investors in key sectors. There are several party-run firms involved in various economic activities, including imports, exports, retailing, construction, and logistics, often at the expense of their private-sector rivals. FDI inflows and commercial partnerships also remain constrained by human rights issues.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
6.0
Expropriation, Nationalisation, Confiscation & Deprivation
7.0
Contract Frustration & Breach
7.0
Taxation
6.0
Bribery & Corruption
7.5
Regulatory Burden
7.0
Strikes, Riots & Civil Commotion
2.0
Security
3.0
Sovereign Default
9.0
Economic Volatiliy
7.0

Risk Rating Scale (small)

Severe
High
Elevated
Moderate
Low

Risk Score BTN

SECURITY MONITOR

ACLED DASHBOARD

MEDIA MONITOR

View Media Monitor BTN

RELATED ARTICLES