31 May 2016

Bank of Botswana official has hinted at indications of stability in electricity and water which he said were positive for domestic economic activity.

Presenting the Bank of Botswana financial report for 2015, the bank’s director of Research and Financial Stability Dr Kealeboga Masalila said a modest recovery of global economy though characterised by uncertainty and risks of lower growth should be expected to influence the economic outlook for this year.

He noted that commodity prices were to remain subdued but there were also prospects for some recovery, which could have an impact on the domestic mining activity.

“Overall growth is projected to recover modestly in 2016,” he said.

He explained that the mining industry contracted by 19.7 per cent due to weak global demand for diamonds.

The economy registered growth of 3.2 per cent in 2014 while it experienced negative growth for two consecutive quarters of 2015 (Quarter 3 and 4) hence placing it in a technical recession due to a sluggish diamond market.

It has not been a great year for the mining sector with several companies hit by the decline in commodity prices and weak demand, amongst them Debswana which has been forced to reduce production while copper/nickel mine, BCL in Selebi Phikwe has also not been spared.

“Negative growth of water and electricity sector weighed down on economic activity,” Dr Masalila said.

Most sectors registered positive growth during the year under review with tourism leading the pack as trade, hotels and restaurants went up by 6.5 per cent, which is still lower than the 7.1 per cent realised in 2014.

He said non-mining GDP growth slowed to 3.5 per cent in 2015 from 3.7 per cent in 2014.

He noted that the national inflation rate has been within the Bank’s medium term objective range of 3-6 per cent, reaching 3.1 per cent in December 2015, resulting with the central bank adopting a favourable monetary policy stance.

Dr Masalila said the low inflation rate was attributed to restrained growth in personal incomes, modest non-mining economic activity, reduction in fuel prices, moderate increase in administered prices and low food price inflation. Ends