14 Dec 2016

 Bank of Botswana (BoB) monetary policy committee has maintained the bank rate at 5.5 per cent as the outlook for price stability remains positive with the inflation forecast within the 3-6 per cent objective range in the medium-term.

A press release from the central bank states that 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 the year to June 2015, thus reflecting the decline of 23 per cent in mining production. Non-mining output increased by four per cent. The bank states that inflation fell slightly from 2.8 per cent in September to 2.7 per cent in October 2016.

It says that subdued domestic demand pressures and benevolent foreign price developments contribute to the positive inflation outlook in the medium term.

However, the outlook is subject to downside risks emanating from sluggish global economic activity and the resultant low commodity prices.  

It could, however, be adversely affected by any unanticipated large increase in administered prices and government levies as well as international oil and food prices beyond current forecasts.

Monetary policy is also aligned with the need to safeguard financial stability and the Bank states that in this regard, credit growth is considered to be at a sustainable level.

Meanwhile, global output is projected to grow by 3.1 percent in 2016, from 3.2 percent in 2015.

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

In addition, the medium-term growth prospects are uncertain as a result of the June 2016 decision by the United Kingdom to leave the European Union and the likely changes in policy following the USA presidential election. ENDS