Country Report Comoros March 2011

Outlook for 2011-12: Economic growth

Real GDP growth is expected to rise gradually in 2011-12, although this is conditional on political stability being sustained. In 2010 growth is estimated to have increased to 2.1%, underpinned by a large rise in donor inflows and strong growth in construction, funded largely by remittances. In 2011-12, if the current pace of gradual progress in improving economic policies is sustained, foreign direct investment (FDI) from the Middle East should rise, donor engagement would be sustained, progress towards HIPC completion would continue and the development of tourism-which has been shackled by chronic political instability and poor infrastructure-could begin. In line with this, growth is forecast at 2.5% in 2011 and 3% in 2012. Further increases in growth will be difficult to achieve over the short term because of the structural constraints that Comoros faces, particularly its geographic isolation, its small domestic market and its limited supply of fertile land. Even this modest forecast is subject to risks, and growth could weaken sharply in the event of political instability, ineffectual leadership or drought. Conversely, if the government is particularly successful in entrenching political stability and attracting foreign investment, there is a small chance that growth will rise above 3% in 2012.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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