After independence, Eritreans set about reviving their economy with their characteristic optimism and determination. The country enjoyed strong economic growth and a low inflation rate. However, the economy was greatly affected by the recent war with Ethiopia. Since 1999, the country's revenue has fallen by 50% and inflation has soared. With the two countries reaching a truce, Eritreans have begun to rebuild their economy again.

Important to the economy is the Red Sea coastline, a strategic location on the international trade route and a potential tourist attraction. Besides working to promote new industries, the government has begun to rebuild the port cities of Massawa and Assab and is trying to develop coastal regions for leisure travellers.

Nearly 80% of the country's population depends on agriculture for its livelihood; however, soil erosion, poor rainfall and outdated technology present major obstacles. As a result, most families practise subsistence farming, growing crops mainly for their own consumption, with a small surplus for trade. Agricultural products account for less than one-fifth of the country's revenue. Teff (a traditional grain), wheat, barley and corn are the main crops of the highlands. In the lowlands, farmers grow sorghum, millet and corn, as well as fruits and vegetables. Certain nomadic groups like the Hedareb and Afar keep large herds as a form of insurance against bad years, but war and drought have hit the herds hard.

Salt is one of Eritrea's most important exports, with Assab being a major centre for salt production. Apart from some basic machinery, salt is produced today as it was thousands of years ago: pools of seawater are left to evaporate in the sun and wind, and then the salt remaining is gathered.

Industrial production accounts for about 20% of the country's revenue, and exports include textiles and processed food. Salt and cement plants operate in Massawa, and a petroleum refinery in Assab.

In the cities, women are increasingly opening up their own businesses and joining the civil service. However, in rural areas, women are relegated to helping in the fields and taking care of the home.

  Did you know?
In 1997, the Eritrean government named its new currency after the town of Nakfa. The site of an important battle during the war, Nakfa symbolizes freedom and resilience.