Sao Tome and Principe Country Risk Report 2019

Sao Tome and Principe Country Risk Report 2019

Economic growth will only rebound modestly in 2019 and we have revised down our real GDP growth forecast from 5.2% to 3.9%. Government fiscal consolidation, continued electricity disruptions and weaker external demand will all prevent a more substantial growth acceleration. Investment from China and international oil companies will be a bright spot for economic growth in 2019.

São Tomé and Príncipe (ST&P)'s policymaking environment will be increasingly fractious in the coming months and there is a strong risk that the ruling coalition does not serve its full term. To the degree that budget cuts are implemented, they will stoke popular opposition to the government, given that they will likely involve increasing VAT and reducing fuel subsidies.

Key Risks

Policy deadlock means that fiscal consolidation recommended by the IMF could be postponed. This would risk a delay in the dispersal of additional IMF financial assistance and thus slow economic growth.

The potential for commercial oil production presents significant upside risks to economic growth in the long term, as it would ease fiscal and current account pressures and support rising capital inflows.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Growth Rebound To Lose Steam In São Tomé And Príncipe
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 5 GOODS EXPORTS (2018)
TABLE: TOP 5 GOODS IMPORTS (2018)
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Long-Term Economic Outlook
Tourism And Infrastructure Sectors Will Bolster Growth Over The Long Term
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Fragile São Tomé and Príncipe Coalition To Be Severely Tested
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.São Tomé and Príncipe Country Risk 2019ContentsLong-Term Political Outlook
São Tomé and Príncipe Long-Term Political Outlook
Demographic Outlook
TABLE: POPULATION BY AGE GROUP
TABLE: POPULATION BY AGE GROUP, %
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION AND LIFE EXPECTANCY
Global Macro Outlook
Global Growth Deceleration, But Policy Increasingly Supportive
TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: SÃO TOMÉ AND PRÍNCIPE – MACROECONOMIC DATA AND FORECASTS

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