Botswana GDP increased by 7.2 percent year on year in 2010 from the revised contraction of 4.9 percent y/y in 2009, latest data from the Central Statistics Office (CSO) has shown.
While the 2010 economic growth is below International Monetary Fund (IMF) projections of 8.9 percent y/y, Motswedi Securities said the growth is ‘encouraging as it shows that the economy is on the path to recovery’.
The growth was led by the mining sector, in line with expectations following the resumption of mining activity in most mines.
According to the CSO data, the mining sector grew strongly by 7.0 percent y/y in 2010 from a contraction of 21.0 percent y/y in 2009, raising its contribution to GDP to 2.1 percent from a contraction of 7.6 percent in 2009.
The ‘trade & hotels’ sector grew significantly from 3.3 percent y/y in 2009 to 9.0 percent y/y in 2010 while ‘agriculture’ also grew strongly to 15.7 percent y/y from 6.0 y/y in 2009.
The ‘transport & communication’, ‘general govt’ and ‘social & personal services’ sectors however, grew slowly to 3.6 percent y/y , 0.4 percent y/y and 3.6 percent y/y in 2010 from 12.0 percent y/y , 3.7 percent y/y and 10.2 percent y/y the previous year.
“It is interesting to note that the contribution of ‘general government’ to GDP fell to 0.1 percent in 2010 from 0.6 percent in 2009 reflecting the impact of the reduction in government expenditure,” said Motswedi Securities.
“It is however, encouraging to note that the non mining sector contribution to GDP improved remarkably in 2010, reflecting the success of the economic diversification programme. For example, the ‘manufacturing’ sector contribution to GDP grew to 0.3 percent in 2010 from a contraction of 0.2 percent in 2009”.
‘Construction’ improved to 0.8 percent from 0.4 percent, ‘trade & hotels’ grew to 1.0 percent from 0.3 percent and ‘business service’ came in 0.6 percent higher from 0.5 percent the prior year.
Finance Minister Kenneth Matambo projects the economy to grow by 6.8 percent in 2011 and 7.1 percent in 2012 provided that the mining sector, the largest contributor to GDP grows by at least 15 percent and 6.2 percent respectively over the same period. The IMF however, anticipates a modest GDP growth of 4.8 percent y/y in 2011.
Although the mining sector is expected to grow strongly in 2011 on the back of improving commodity prices on the international markets, we expect the non-mining sector to grow modestly as a result of the decline in government spending. (Motswedi Securities)