07 Feb 2022

The domestic economy is projected to grow at a rate of 4.3 per cent this year following the 9.7 per cent growth predicted for 2021.

Delivering her maiden budget speech in Parliament yesterday,  finance and economic development minister Ms Peggy Serame also said signs of recovery from the impact of COVID-19 were apparent in the local economy.

She said local economic activity grew by 13.5 per cent year on year during the first three quarters of 2021 compared to negative growth of 10.1 per cent in the same period in 2020.

“The recovery was felt across most sectors of the economy,” she said.

Ms Serame said the recovery  reflected the impact of easing of travelling restrictions, tourism activity and resumption of global diamond trade as well as implementation of major infrastructural projects.

Another positive is that the country’s foreign exchange reserves experienced a modest recovery to P60 billion last year, an increase of 4.3 per cent from the P57.5 billion of October 2020.

Ms Serame explained that the level of foreign exchange reserves was equivalent to approximately 11 months of imports.

“...This level of foreign exchange reserves is assessed to be sufficient to meet the country’s international obligations and make external payments for goods and services as well as for the conduct of sound macroeconomic policies and providing a buffer against external shocks,” she said.

The minister said although the country’s external account or balance of payments continued to be in deficit, it continued at a lower rate of 4.4 per cent of GDP  in 2021 compared to 11.6 per cent  the previous year.

Ms Serame warned that due to its unpredictability, the COVID-19 pandemic would determine the speed at which the domestic economy recovered, especially recovery in international travel and tourism.

Noting that there were signs of optimism for economic recovery globally, Ms Serame however said global recovery was being held back by international trade and shipping delays as well as rising costs.

As for the SADC region, she said its economy was projected to grow by 3.2 per cent this year following last year’s 4.2 per cent prediction.

Minister Serame said there were downside risks from slow vaccine distribution and low uptake in some SADC countries.

In addition, she said several member states were also constrained due to weak fiscal positions and high levels of public debt. BOPA