Ethanol is produced by reacting methanol with carbon monoxide and hydrogen at temperatures in the range 150 to 250°C and pressures greater than 100 bar in the presence of a cobalt catalyst and an additive which is miscible with methanol containing up to 20%w/w water, which additive is an alcohol, an aldehyde, a ketone or an ether. Particular additives are n-propanol, n-butanol, acetone, acetaldehyde, 1,4 dioxane, tetrahydrofuran, di-n-propylether and diphenyl ether. Optionally the catalyst is promoted with iodine or bromine or preferably both iodine or bromine and an organo-phosphorus compound. Other additives such as non-polar solvents, acids and derivatives thereof and inert liquids can be incorporated in the reaction mixture.