05 Feb 2024

  The latest national accounts data released by Statistics Botswana in December 2023, the performance of the domestic economy has shown a significant change. The data indicates that the domestic economy averaged 3.0 percent during the first three quarters of 2023, a considerable drop from the 5.5 percent average realised during the same period in 2022.

During the presentation of the 2024/2025 Budget proposals on Monday, Minister of Finance, Ms Peggy Serame, attributed the slowdown in growth to the relatively weak performance of diamond trading and mining activities throughout 2023.

Consequently, the estimated growth for the domestic economy in 2023 has been revised downwards to 3.2 percent from the earlier estimate of 3.8 percent. 

However, there is hope for a rebound as it is anticipated that the domestic economy will grow to 4.2 percent and 5.4 percent in 2024 and 2025, respectively, as the global economy recovers.

Ms Serame also highlighted that the economic performance in Botswana tended to mirror that of the global economy. 

Despite the expected slowdown, it is estimated that the non-mining sector would grow on average by 5.7 percent, potentially generating new jobs across both the formal and informal sectors.

To achieve the desired Vision 2036 growth target of six percent, it is essential for Botswana to boost productivity levels by an annual average growth of two per cent, as indicated by the World Bank Group. 

This, she said  could be achieved through inclusive drivers of growth such as effective implementation of investment projects, creation and growth of dynamic local firms, adoption of new technologies, and enhancing connectivity to increase markets through trade, transport, and digitalisation, as well as developing skills in the labor force.

Regarding inflation, Ms Serame noted that it had moderated and reverted to the Bank of Botswana’s objective range of 3 - 6 per cent, following record-high peaks in 2022. In December 2023, inflation reached 3.5 percent compared to 12.4 percent in December 2022. 

She attributed the moderation of inflation during 2023 to the fading effects of increases in domestic fuel prices as global energy prices reduced. In line with the lower inflationary pressures, the Bank of Botswana reduced the Monetary Policy Rate from 2.65 percent to 2.40 percent in December 2023.

Looking at the external sector, provisional balance of payments data indicates a surplus of P5.1 billion in the first nine months of 2023, compared to a surplus of P5.40 billion during the corresponding period in 2022. 

“This surplus is attributed to a large current account surplus of P7.40 billion supported by increased Southern African Customs Union receipts and mineral exports proceeds, she said. Additionally, the foreign exchange reserves as at October 2023, stood at P64.90 billion compared to P60.80 billion in 2022 during the same period.

The level of foreign exchange reserves is equivalent to nine months of import cover of non-diamond goods and services, as compared to 8.4 months in the previous year. Ends