Economic Analysis - Higher Coffee Prices To Support Economic Growth - JAN 2018


BMI View: Efforts by the Timor-Leste government to diversify away from its overreliance on oil and gas are likely to be gradual, but we expect higher coffee prices to be supportive of economic growth over the coming quarters. The government's infrastructure plan will also be positive for the future development of the sector even as it seeks to increase foreign investment in agriculture. We therefore maintain our forecast for real GDP to grow by 6.0% in 2017 and 5.8% in 2018.

The Timorese government is attempting to develop other sectors of the economy as part of its ongoing plans to move the country away from its overreliance on oil and gas exports. While we expect oil and gas to remain the main driver of growth over the coming quarters, we highlight that higher coffee prices and government efforts to increase foreign investment in the agricultural sector will be supportive of growth over the coming quarters. Over the longer term, we believe that the government's infrastructure plan will bode well for the outlook of the coffee sector as improved connectivity enables coffee farmers to export their beans. We therefore maintain our forecast for real GDP to expand by 6.0% in 2017 and 5.8% in 2018.

Rising Coffee Prices To Support Growth

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