Lesoto

Economic Profile of Lesotho

Lesotho is a landlocked country completely surrounded by South Africa, with a population of approximately 2 million and is a lower-middle-income country. The economic scale is limited with a GDP of approximately $2.5 billion, but it holds a unique position within the region.

The four pillars of the economy are textile and apparel manufacturing, mining, agriculture, and hydroelectric power generation. The textile industry in particular benefited from the U.S. African Growth and Opportunity Act (AGOA) and was formerly a major source of employment and foreign exchange earnings, but has shown declining trends in recent years due to intensified competition. Meanwhile, mining of diamonds and other minerals is also an important industry. Hydroelectric power generation serves as a source of foreign exchange through electricity exports to South Africa. Agriculture employs the majority of the population, but productivity is low and food self-sufficiency is insufficient.

Regarding recent economic trends, the country faces multiple challenges. Dependence on South Africa's economy is extremely high, and as the two countries maintain a currency union, Lesotho is significantly influenced by South Africa's economic conditions. Declining employment due to contraction of the textile industry and rising unemployment are serious issues. Simultaneously, political instability and civil service salary payment problems also hamper the economy.

A notable point is the abundant water resources provided by Lesotho's steep terrain, with expectations for increased investment in hydroelectric power generation and related projects. Furthermore, economic diversification through strengthened relations with South Africa and deepening regional integration has become urgent. Human capital development and industrial cultivation will be key to long-term economic growth.