Country Report Comoros March 2011

Outlook for 2011-12: External sector

The current-account deficit will remain wide over the forecast period. Goods exports-which consist largely of ylang-ylang, vanilla and cloves-will remain extremely small and will continue to be dwarfed by imports. Export growth will be constrained by weak prices and low agricultural yields. Imports will grow less rapidly than in 2010, in line with commodity price trends, but the structural trade deficit will nevertheless continue to widen. Services exports will grow very slowly, as a record of enduring political stability will need to be established for tourism to take off. Services imports will rise in line with goods imports, leading to a growing services deficit. Income debits will fall as interim debt relief reduces the external debt-servicing requirement. Current transfers-remittances and foreign aid-will remain substantial (equivalent to over 25% of GDP) and will finance the vast majority of the trade deficit, although aid inflows are expected to fall as Western governments continue to face severe fiscal pressures. Overall, the current-account deficit is forecast to widen to 11.9% of GDP in 2011 and 12.9% of GDP in 2012, largely as aid inflows decline. This deficit will be financed in part by FDI inflows from the Middle East and credit from the IMF.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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