Haiti Country Risk Report 2Q 2016
Haiti will struggle with subdued growth, significant political unrestand sustained budget deficits over our 10-year forecast period. Whilethere is concerted international effort to assist Haiti’s reconstructionfollowing the 2010 earthquake, it will take decades for the countryto raise living standards to those of regional peers.
Suppressed global oil prices will damage Haitian long-term growthprospects. Haiti relies on discounted oil from Venezuela as its primaryfuel cost. With low global oil prices set to hit the Venezuelaneconomy hard, the government in Caracas is likely to scale back its‘Petrocaribe’ discounted oil programme, to the detriment of long-termHaitian economic activity.
We expect economic growth in Haiti to tick up marginally in 2016on the back of robust exports to the US. We forecast the Haitianeconomy to grow by 1.9% in 2016 compared to 1.7% in 2015. Tradeagreements with the US together with stronger growth in the USeconomy will drive Haiti’s apparel exports over the year ahead.
Persistent fiscal deficits and waning Petrocaribe flows, in the wakeof lower oil prices, will create a financing gap over 2016 and 2017.
We forecast the fiscal balance to remain in deficit over the next twoyears and will average 5.2% of GDP.
The weak exchange rate will be the main driver of inflation over theyear ahead due to a high exchange rate pass-through to inflation.
Furthermore, the drought experienced in 2015 will keep food priceselevated due to reduced domestic agricultural output.
The indefinite postponement of Haiti’s second-round presidentialelection will increase political risk in the country, as it approachesthe end of President Michel Martelly’s term. Continued public unrestwill complicate negotiations for an interim government and increasethe risk a constitutional crisis.
- Executive Summary
- Core Views
- Key Risks
- Chapter 1: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Index
- Economic Growth Outlook
- Exports To Outperform Amid Slow Growth
- Economic growth in Haiti will accelerate marginally in 2016 on the back of robust exports to the US. Favourable trade agreements and
- stronger growth in the US economy will drive demand for Haiti's apparel exports.
- GDP By Expenditure Outlook
- TABLE: GDP GROWTH FORECASTS
- TABLE: PRIVATE CONSUMPTION FORECASTS
- TABLE: GOVERNMENT CONSUMPTION FORECASTS
- TABLE: FIXED INVESTMENT FORECASTS
- TABLE: NET EXPORTS FORECASTS
- Monetary Policy
- Exchange Rate Depreciation Will Send Inflation Higher
- Inflation in Haiti will head higher in the next year, as depreciation stokes imported price growth and drought conditions push up food
- prices. The elevated inflation will undermine already weak consumer purchasing power and further exacerbate elevated popular
- Monetary Policy Framework
- Fiscal And Debt Outlook
- End Of Petrocaribe Will Keep Financing Gap Substantial
- Haiti 's fiscal deficit will remain relatively wide through 2017 as financial inflows from Venezuela's Petrocaribe programme into the
- country dissipate in the wake of low oil prices. Haiti will finance its shortfalls through debt issuances, increasing its debt load as well as
- raising the cost of financing new debt.
- Structural Fiscal Position
- External Trade And Investment Outlook
- Import Dependence To Drive Widening Deficit
- Haiti's current account deficit will widen in the next two years as demand for agricultural products and manufacturing inputs boosts
- goods imports. Remittance in flows will provide support to the current account, preventing a more significant widening of the shortfall.
- Outlook On External Position
- TABLE: TOP FIVE GOODS EXPORTS IN
- TABLE: TOP FIVE GOODS IMPORTS IN
- TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
- Long-Term Economic Outlook
- Likely Withdrawal Of Petrocaribe Programme To Weigh On Outlook
- Haiti will struggle with subdued growth, significant political unrest and sustained budget deficits over our 10-year forecast period. While
- there is concerted international effort to assist Haiti's reconstruction following the 2010 earthquake, it will take decades for the country to
- raise living standards to those of regional peers.
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
- Chapter 2: Political Outlook
- SWOT Analysis
- BMI Political Risk Index
- Domestic Politics
- Election Postponement Signals Rising Political Risk
- The indefinite postponement of Haiti's second-round presidential election will increase political risk in the country, as it approaches the
- expiration of President Michel Martelly's term. Continued public unrest will complicate negotiations for an interim government and could
- risk a crisis of legitimacy.
- Long-Term Political Outlook
- Major Threats To Stability To Remain Prominent
- Haiti will remain one of the most politically unstable countries globally. The country is still struggling to recover from the catastrophic
- 2010 earthquake, a situation made worse by rampant poverty, weak governance and endemic corruption.
- Chapter 3: Demographic Outlook
- Demographic Outlook 2016
- TABLE: POPULATION BY AGE GROUP
- TABLE: POPULATION BY AGE GROUP %
- TABLE: POPULATION HEADLINE INDICATORS
- TABLE: KEY POPULATION RATIOS
- TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
- Chapter 4: BMI Global Macro Outlook
- Global Macro Outlook
- Downside Risks Gather Momentum
- TABLE: GLOBAL ASSUMPTIONS
- TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
- TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
- TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
- TABLE: MACROECONOMIC DATA & FORECASTS