Lesotho Country Risk Report 20 2018
Despite relative stability over the last few months, political tensions continue to simmer in Lesotho. These tensions are unlikely to mani-fest in a coup or in widespread instability, given ongoing regional intervention, but the coalition government led by Prime Minister Tom Thabane is unlikely to last its full term to 2022.
Lesotho economic growth will not receive a boost from a brighter economic outlook in South Africa over coming quarters, with declining external competitiveness likely to offset stronger domestic demand. Over the longer term, the Lesotho Highlands Water project will sup-port economic growth as South Africa’s need to keep the project on track have been emphasised by water shortages in parts of the country.
Looking further ahead, Lesotho is poised for a decade of stable and moderate real GDP growth, based on its expanding clothing and textiles sector and a burgeoning construction industry and increased telecommunications and financial service activity. The country’s high levels of poverty and HIV/AIDS prevalence will remain obstacles to stronger economic development.
We expect Lesotho’s large net official reserve assets to decline over the next few years as fiscal expenditure is loosened further and as Southern African Customs Union receipts remain volatile. We expect Lesotho’s current account balance to remain in deficit for most of our forecast period.
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