13 Oct 2015

Shortage of water and electricity and a declining mining industry had a negative impact on economic growth as they weakened by 41.1 per cent and eight per cent respectively during the second quarter of this year. 

Botswana is faced with shortage of water and electricity, which has negatively affected businesses. Information from Statistics Botswana shows that real GDP went up by 2.5 per cent compared to 3.4 per cent realised in the first quarter of 2014. 

On quarter-to-quarter, the economy recorded a decrease of 0.4 per cent as electricity demand continued to outstrip supply.

The decline in the mining sector has been attributed to a decrease in diamond production. Copper/nickel production has also weakened. The closure of Boseto copper mine is attributed to the decline in copper/nickel production. International commodity prices are expected to remain low as demand in China slows.

The electricity sector has been contributing negatively to the economy since the first quarter of 2012 due to a substantial increase in intermediate consumption.

The government has embarked on strategies to offer permanent solutions, amongst them the refurbishment of Morupule A power plant and engagement of independent power producers .

Statistics Botswana indicates that the electricity value added went down by 130.8 per cent in the quarter under review. 

Other than energy and mining, other sectors such as trade, hotels and restaurants, finance and business services and general government increased by 6.9, 5.8 and 5.8 per cent respectively.

The International Monetary Fund (IMF) states in its latest World Economic Outlook report that Botswana’s economy is expected to grow by 2.6 per cent this year and improve by 3.2 per cent next year. 

Globally, growth is projected to decline from 3.4 per cent in 2014 to 3.1 percent in 2015 before picking up to 3.6 per cent in 2016.

The IMF states that the decline in growth this year reflects a further slowdown in emerging markets, particularly offset by a modest pickup in activity in advanced economies. It says the pickup, supported by the decline in oil prices and accommodative monetary policy, will modestly narrow output gaps. Ends