Responding to the emerging economic landscape characterised by the double whammy of uncertainty and high unemployment will among others require decisive structural reforms and an appropriate policy mix.
This was the message coming out from the Spring meetings of the International Monetary Fund (IMF) and World Bank that were held in Washington DC, US.
The Governor of the Bank of Botswana (BoB), Linah Mohohlo participated at the meetings in her capacity as Botswana’s representative on the non-executive Board of the IMF. Some of the pertinent issues which were discussed include prospects for economic growth and related policy responses and specifically the funding and support roles of the IMF and World Bank. From the deliberations, it would appear that there is a rationale to settle the insistently gathering headwinds caused by the current volatile, uncertain, complex and ambiguous (VUCA) market conditions.
“It was observed that the global economic outlook was characterised by uncertainty and modest global growth, in the context of low commodity prices, volatile financial markets, demographic changes and concerns about China’s transition to lower rates of economic growth. Notably global economic growth was at its lowest since 2009, while future growth has been revised downwards. The contribution of advanced countries was muted, while emerging markets and other developing economies (which have been the main drivers of economic activity since the financial/economic crisis) were experiencing a slowdown due to country-specific weaknesses and external factors, such as tightening financial conditions and capital flow reversals,” states the Central Bank.
The solutions suggested from the meetings, as noted by the Central bank, aim to reverse declining productivity, to increase female participation in economic activities, to build fiscal resilience by commodity exporters and to enhance trade cooperation. It is anticipated that the measures will reinvigorate the economies to return them into the path of sustainable growth. According to the projections provided from the meetings the global economy is expected to grow at 3.2 percent in 2016 and 3.5 percent in 2017, with specific reference to Sub Saharan Africa, the growth rates are projected to grow by 3 percent.
Earlier this year in February the Finance Minister Kenneth Matambo when presenting the national budget speech projected that Botswana’s economy will grow by 4.2 in 2016. It remains to be seen if Botswana’s growth, amid its economic challenges, will indeed surpass that of the world and Sub-Saharan Africa.
The Central Bank appears committed in accommodating the rising new expectations of the global economy given that earlier in April, when it celebrated 40 years, it unravelled perspectives on the possibilities of broadening its mandate as a Central Bank. In the discussion of expanding its scope, it also took into the consideration the need to simultaneously increase its capacity to deliver on an extensive mandate.