In-Depth Analysis
Lesotho
The kingdom’s economy is heavily dependent on that of South Africa and the US. The primary sector has increased its contribution to GDP through the rise of mining operations since 2004, while the secondary sector has declined due to the clothing and textiles subsector losing competitiveness against Asian peers. The economy has been under pressure of late, largely tied to a dismal performance in South Africa.
Although Covid-19 cases in the landlocked nation have remained low so far, measures to contain the spread of the virus are expected to have severe economic implications. Regional economic weakness, trade disruptions, and depressed external demand will weigh heavily on Lesotho this year, with the economy forecast to contract by 7.0% in 2020, followed by a 4.7% recovery in 2021. Despite the deterioration in our outlook for the economy, we expect growth over the short- to medium term to be supported by construction projects linked to Phase II of the Lesotho Highlands Water Project. On the political front, while the new government settles in, we maintain our political risk rating at moderate, but we have adjusted our overall trend from negative to stable. While the peaceful transition of power is a positive development for Lesotho’s politics, Prime Minister Moeketsi Majoro has many promises to fulfil to change local and international perceptions of political instability. (Source: Lesotho Annual Country Profile, published July 2020.)
Macroeconomic Data
(2019)
|
Fiscal Balance (as a % of GDP) |
-3.1 |
|
Consumer Price Index (% change y-o-y, avg) |
5.2 |
|
Current Account Balance (as a % of GDP) |
-5.8 |
|
Real GDP (annual % change) |
-1.2 |
|
GDP per Capita, US$ |
1,139.6 |
|
Import Cover (months) |
4.3 |
|
Population, million |
2.1 |
| Total External Debt (as a % of GDP) |
44.7 |