05 Jun 2018

The domestic economy is projected to grow by 5.3 per cent in 2018 after growing by only 2.4 percent last year.

According to economic growth prospects from Bank of Botswana (BoB), the recovery in mining sector would be due to anticipated recovery in commodity prices 8. The 5.3 per cent projections are slightly higher than the global projections of 3.9 percent for 2018.

The central bank pointed out that the growth was expected to be largely driven by recovery in mining activities, accommodative monetary conditions in the domestic economy, and budgeted expansion in government expenditure in the 2018/19 fiscal year.

It further said stability in the supply of key inputs such as water and electricity was expected to support growth of the non-mining sectors.

The BoB director research and financial stability Dr Tshokologo Kganetsano, explained on Friday that the slow growth in 2017 was mainly due to contraction of 11.2 per cent in the mining sector and a slower growth in the non-mining GDP of 4.2 per cent compared to 5.5 per cent in 2016.

He explained that contraction in the mining sector was mainly driven by closure of the BCL and Tati Nickel mines, adding that the closure of BCL Mine also impacted negatively on the water and electricity sector since it was one of the largest consumers of those commodities.

He therefore said that negative impact resulted in a slow growth in the non-mining GDP as well.

Dr Kganetsano said the mining sector still played a significant role in the overall performance of the economy.

“You look at the period in 2013 where there was a huge expansion in the mining sector of close to 25 per cent and the overall GDP recorded impressive growth. And when the mining sector contracted in 2015 there was contraction in the overall economy,” he said.

Dr Kganetsano also paid tribute to the agriculture sector, saying it had continued to record a steady growth in the past few years. It recorded a marginal growth of 0.3 per cent in 2015, 0.5 per cent in 2016 and 2.1 last year.

He said the growth was commendable looking at the history of performance of the agricultural sector.

“This means that agriculture just like any other sector has the potential to contribute in economic growth and employment creation,” he added.

Dr Kganetsano said headline inflation in Botswana increased marginally from 3 per cent in 2016 to 3.2 per cent in in 2017, while the figure was 3.4 per cent in April this year.

He said the low inflation was mainly reflective of restrained growth in personal income, subdued growth in government expenditure and modest growth in non-mining economic activities.

He said food prices went down especially cereal due to good performance of the agriculture sector. However, he said fuel prices increased considerably since October 2017.

Regarding the balance of payments, he said it experienced a deficit in 2017 of P3.3 billion compared to P2.8 billion surplus in 2016.

Dr Kganetsano said this was due to a decline in exports of 23.5 per cent from P80.3 billion in 2016 to P61.4 billion in 2017 and decline of imports by 19.1 per cent from P64 billion in 2016 to P51.8 billion in 2017.

“This contributed to deficit in the balance of payments. If you look at the decline in exports it was more than the decline in imports,” he said. ENDS