Togo Country Risk Report 2019
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 are forecasting average real GDP growth of 4.5% over the coming decade.
We expect the authorities will run primary fiscal surpluses over the next ten years meaning a 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 in the coming quarters 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.
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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