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Lesotho Country Risk Report 20 2018

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.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
No Change To GDP Growth Despite Brighter Outlook For South Africa
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: TOP FIVE EXPORTS
TABLE: TOP FIVE IMPORTS
Monetary Policy Framework
Structural Fiscal Position
Chapter 2: 10-Year Forecast
The Lesotho Economy To 2027
Slow, But Steady Growth Ahead
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Relative Tranquillity Masks Underlying Tensions
Long-Term Political Outlook
Competition For Power Between Political Elite Poses Risks
Chapter 4:BMI Global Macro Outlook
Trade Tensions Take Centre Stage
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: LESOTHO – MACROECONOMIC DATA & FORECASTS

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