Togo Country Risk Report 20 2018
Togo's political crisis will continue to have a negative effect on the economy by providing headwinds to private investment and government spending. However, the extent of the slowdown will blunted by continued engagement with bilateral and multilateral lenders and by the country's membership of the West African Monetary Union, which will prevent destabilising currency volatility.
Exports and private consumption will be the main drivers of economic growth as both reap the benefits of aggressive public investment in recent years. A large debt load means that the government will tighten the reins and government consumption and investment will play less of a role. Overall, we forecast average real GDP growth of 4.6% over the coming decade.
We expect the authorities will run primary fiscal surpluses over the next 10 years, meaning that the high government debt will fall slowly as a proportion of GDP. A high proportion of concessional lending in the public debt load will limit risks of a debt crisis in the meantime.
Togo's current account will remain in deficit over our forecast period, owing to a large trade account shortfall. The net international investment position will move further into negative territory as a result, as the country relies on external debt and foreign direct investment to cover import demand.
Togo's membership of the Union Economique et Monétaire Ouest Africaine will ensure that the country continues to enjoy a low and largely stable inflation rate. We forecast that it will average 2.8% over the next 10 years.
Togo's political crisis is likely to persist until the end of 2018, with neither the opposition nor President Faure Gnassingbé likely to make significant concessions in the short term. That said, regional mediation efforts are likely to prevent a complete collapse of social order and a fragile deal is likely to eventually be agreed in 2019.
Adverse weather conditions that affect crop production would be negative for private consumption and economic growth.
Lower-than-expected growth in neighbouring economies that leads to fewer imports passing through Togo would have a negative impact on the important freight transport sector.
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