Economic Analysis - Many Challenges Weigh On LT Growth Outlook - MAR 2018
BMI View: We forecast real GDP growth in Timor-Leste to average 4.7% over the next decade, which will be considerably lower than its historical average of 16.1% as the government faces myriad challenges that are likely to weigh on growth. That said, we note that the government is actively seeking to address these challenges and the risks to growth are likely tilted to the upside.
Timor-Leste faces considerable long-term challenges that are likely to present continued headwinds to economic growth, informing our forecast for real GDP growth to average 4.7% over the next decade. We highlight that this marks a considerable slowdown from the historical average of 16.1% (last 15 years). This is largely due to the economy's overreliance on oil and gas, high rates of unemployment, relatively unstable domestic political situation, and still-tense bilateral relations with Australia that are dependent on the domestic situation. However, we highlight that the government is aware of the challenges and is actively seeking to promote new avenues of growth through its infrastructure programme and the development of the tourism sector, suggesting that risks to growth are likely tilted to the upside.
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