• Textile, mining sink economy
• Lesotho’s economy sink by 6 per cent before it is expected to rebound in 2021-2022 by just 4.33 per cent
The two industries are among some of the primary contributors to the country’s economy with mining, which is dominated by diamonds, accounting for 5.7 per cent of GDP in 2019.
The textile and clothing industry on the other hand is the largest private-sector employer, with more than 40 000 people employed in the industry as of the first quarter of 2019.
Both industries have been hard hit by the COVID-19 pandemic, which led to a significant drop in production. Dreams were shattered and poverty rose to new standards as thousands of people lost jobs in the textile and mining industries.
On November 24, the CBL Monetary Policy Committee (MPC) warned that domestic economy is projected to contract by a revised 6.0 per cent in the last part 2020, due to the economic fallout of the COVID-19 pandemic.
“The output contraction is expected to be led by a decline in economic activity in the textile and clothing industry, construction, as well as the mining industry,” CBL governor Dr Retšelisitsoe Matlanyane, said when announcing the MPC statement.
In the medium term, the CBL governor allayed fears, revealing that the economy is projected to recover gradually and grow at an average rate of 4.33 per cent over the period 2021-2022.
While the recovery is conditional on developments related to the COVID-19 containment, Dr Matlanyane said it was likely to come largely at the back of a strong rebound in the mining and construction industries.
The rate of inflation, measured by year on the year percentage change in consumer price index (CPI), registered 5.6 per cent in October 2020, relative to 5.9 per cent in September, the same period.
“This was mainly due to an increase in food and non-alcoholic beverages as well as clothing and footwear,” Dr Matlanyane added. In terms of the outlook, the revised annual inflation rate is projected to register a revised 5.0 per cent this year before increasing to 5.2 per cent and 5.3 per cent in 2021 and 2022 respectively.