18 Aug 2014

Bank of Botswana Monetary Policy Committee has maintained the bank rate at 7.5 per cent citing favourable inflation outlook.

In a statement released last Friday, the central bank said it expected the national inflation to be within its 3-6 per cent objective in the medium term.

Commenting about the economic outlook and assessment of risks, the bank stated that global economic output was estimated to have grown by 3 per cent in 2013 and was projected to grow by 3.6 per cent in 2014 and 3.9 per cent in 2015, buoyed by improved growth in advanced economies and continuing strong performance in emerging markets.

The statement also said however, overall GDP growth remained moderate, with subdued demand and capacity underutilisation in major economies, as well as the high unemployment rates that continued to constrain worldwide inflation.

On the local economy, growth was estimated at 5.9 per cent in the 12 months to March 2014, reflecting the 14.2 per cent and 4.6 per cent increase in mining and non-mining output respectively. Non-mining activity is expected to be below potential.

The impact of domestic demand on economic activity, it further said, was projected to be modest, largely indicating trends in government expenditure and personal incomes.

Meanwhile, inflation rate eased from 4.6 per cent in June to 4.5 per cent in July and the bank stated that the weak domestic demand and projected benign external price developments result in a positive inflation outlook for the medium term.

However, the Bank states that this outlook could adversely be affected by any unanticipated large increase in administered prices and government levies as well as international oil prices that are currently higher than currently forecast.

Statistics Botswana states that the annual inflation rate in July last year stood at 5.7 per cent. Ends