01 May 2020

Ministry of Finance and Economic Development and the International Monetary Fund (IMF) projections suggest a sharp deterioration in economic growth for Botswana in 2020.

Addressing a press conference via Skype on April 30, Bank of Botswana Governor, Mr Moses Pelaelo said in April 2020 World Economic Outlook and the IMF forecast Growth Domestic Product (GDP) to fall by 5.4 per cent this year, before rebounding to 6.8 per cent in 2021, while the MFED estimates that the economy will contract by 13.1 per cent and rebound to a 3.9 per cent growth in 2021.

He said this wide range of forecasts attest to the challenges of making forward projections, where there is uncertainty about the duration of constrained economic activity, the resultant damage to produce capacity, as well as the speed of resumption of production and pace of recovery in demand.

Mr Pelaelo said the contraction in GDP reflects the substantial curtailment of economic activity due to the necessary global and domestic measures implemented to contain the spread of COVID-19 and safeguard human life.

“The resultant decrease in global demand and disruption in supply chains, as well as curtailed economic activity locally, has affected several sources of economic growth for Botswana, notably these include exports such as minerals and tourism as well as non-food retail economic activity and also, disruption of the harvest season during a relatively good year when farmers in general were expecting a bumper harvest of various crops, especially cereals,“ he said.

The Governor said unlike in the 2008/9 global crisis, the exogenous shock to the economy occurred amid weakening of the country’s fiscal and external buffers, characterised by government fiscal deficits for three consecutive financial years and gradual decline in foreign exchange reserves from 18.3 months of import cover in 2015 was P84.9 billion to the current level of P68.9 billion as at end of January 2020, which is equivalent to an import cover of 13.3 months. 

He said the global backdrop is that the world economy was forecast to contract by three per cent in 2020, which is worse than the contraction experienced during the 2008/9 global financial crisis, and the fallout from the COVID-19 crisis is projected to surpass that of the great depression of the 1930s.

He however, said economic activity was expected to rebound in 2021, with global growth estimated at 5.8 per cent, anchored by unprecedented policy and resource support by individual countries and multilateral institutions. Ends