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Laboratoire de la finance africaine

Lesotho

Aperçu 2023
Annual current GDP growth (%) : 2.36
GDP (USD billions) : 2.592
Population (Thousands) : 2.112 
Economic performance and outlook

The Lesotho economy was estimated to contract by 5.2% in 2020 from modest growth of 0.6% in 2019. This reflects measures to mitigate the COVID–19 pandemic and low external demand, which adversely impacted the mining and manufacturing industries. Estimates of growth in the mining industry (textiles and clothing, construction) and services were revised downwards by 34.5, 29.3 and 9.9, and 4.2 percentage points in 2020, respectively. Lesotho’s economy is closely linked to South Africa’s with imports from South Africa, mainly foodstuffs, constituting about 80% of its total imports. The decline in imports from South Africa contributed to food shortages in Lesotho, fueling inflationary pressures. Hence, inflation was estimated to decline only marginally, to 5.0 % in 2020 from 5.2 % in 2019. The fiscal deficit was estimated to widen to 10.2% of GDP in 2020 from 5.6% in 2019, largely driven by a 25 % increase in government expenditures mainly on the wage bill and government spending on health care to fight the pandemic. Much of the financing gap is expected to be met through foreign borrowing unless the government undertakes substantial fiscal adjustments to curb the widening fiscal deficit and the associated accumulation of foreign debt, which could threaten debt sustainability. External debt stood at 36.1% of GDP in 2020, well below the convergence criterion of 60% of GDP set by the South African Development Community (SADC). The decline in exports to both South Africa and the United States and reduced investments from China and South Africa, coupled with dwindling incomes and transfers, led to a deterioration in the current account, deficit from 6.0% of GDP in 2019 to 7.2% in 2020. The widening current account deficit also reflected a 26.6% decline in diamond exports and a 21.2 % decline in textile exports. It will be financed by a drawdown in foreign reserves. The banking sector remains stable with non-performing loans declining marginally from 3.2% in 2019 before increasing to 4% in the second quarter of 2020. (Download detailed Analysis Source : Report African Economic Outlook 2021 ; AfDB).

Financial markets

In June 2017, the banking sector of Lesotho represented a total asset of $ 0.27 billion.

Credit distributed to businesses represents $0.15 billion and, more broadly, credit to private sector totaling $0.43 billion.