18 Oct 2016

Bank of Botswana (BoB) on Tuesday maintained the bank rate at 5.5 per cent saying it is consistent with maintaining inflation within the bank’s medium term objective range of 3-6 per cent.  

This comes after the rate was slashed by 50 basis points in August as inflation continued to be within the lower end of the medium term objective.

A press release from the central bank states that inflation increased from a historic low of 2.6 per cent in August to 2.8 per cent in September.

Subdued domestic demand pressures and benign foreign price developments contribute to the positive inflation outlook in the medium term.

“This outlook is subject to downside risks emanating from sluggish global economic activity and the resultant low commodity prices,” it is stated.

The bank states that the outlook could be affected by any unanticipated large increases in administered prices and government levies as well as international oil and food prices beyond current forecasts.

On economic growth, Bank of Botswana states that global output is projected to grow by 3.1 per cent in 2016, from 3.2 per cent in 2015, and 3.4 per cent in 2017.

Economic performance across the world however remains uneven, with challenges relating to economic restructuring in both developed and emerging market economies.

“In addition, uncertainty arising from the June 2016 decision by the United Kingdom to leave the European Union could further constrain medium-term growth prospects,” the release states citing the ‘Brexit’ vote.

Talking about Botswana, it is said real GDP is estimated to have contracted by 0.3 per cent in the 12 months to June 2016, compared to growth of 3.1 per cent in June 215, this reflecting a decline of 23 per cent in mining production. 

Non-mining output increased by 4 per cent. ENDS