Thursday, April 9, 2020

Botswana maintains GDP growth rate at 3.1 percent

Botswana’s economy continues to show signs of weakness, with the latest Gross Domestic Product (GDP) figures revealing that the diamond dependent economy staggered following slowed growth in key sectors.

Statistics Botswana’s recently published data shows that real GDP grew by 3.1 percent in the third quarter of 2019 (Q3 2019), which was a similar rate compared to the second quarter. However, the 3.1 percent annual growth rate is lower than the 4.1 percent rate recorded in 2018’s third quarter. The GDP growth was constrained by both mining and non-mining sectors.

Notwithstanding, the slight growth in real GDP was jump-started by steady growth in the value added by the finance and businesses sector which grew by 6.1 percent on the back of improved economic activity in real estate, banks and businesses. The Trade, Hotels and Restaurants, which is the main contributor to GDP, also boosted growth with valued added by the sector  going up by 5.5 percent down to significant increase in trade, thanks to the mushrooming of malls across the country.

The Transport and Communications showed resilience, contributing positively to GDP after advancing by 5.3 percent, with the growth attributed to increase in the value added by air transport after introduction of scenic flights in some tourism-focused parts of the country, mostly at the iconic Okavango Delta.

Growth in the water and electricity stumbled, registering at 2.4 percent decrease, slowed down by electricity which registered negative growth of 13.7 percent in the third quarter of the year after local electricity generation plunged by 39.6 percent, resulting in imports of electricity going up by 120 percent during the quarter under review. The significant decrease in local electricity production were largely due to reduced performance of the Morupule B Power Station which was not operating at full capacity, said Statistics Botswana.

The mining sector was under pressure during the quarter, dragging GDP growth after the sector declined by 2.2 percent on the back of slowed production in soda ash, coal and diamond value added. Diamond production went down by 0.7 percent while soda ash and coal production in tonnes decreased by 5.8 and 28.7 percent respectively in the third quarter of 2019.

The Agriculture sector was another blight spot as output suffered, declining by 1.4 percent, with the plunge blamed on losses suffered in the livestock and crops sub-industries. The country has been suffering from a drought spell that started in 2018.

“The financial year 2019/20 was declared a drought year. The impact of drought had a negative bearing on the animal production as well as crop production statistics. The effects of drought on overall growth of the economy are insignificant, the influence have however started to materialize on the Agricultural industry growth. Year on year growth in the agriculture industry was weak when compared to same quarter last year,” the data agency said.

The slowed economic growth follows recent downward revisions of output by the government. In November 2019, Finance ministry officials caved in to the economic pressures, and finally slashed Botswana’s growth prospects, announcing that GDP is forecasted to grow by 3.6 percent in 2019, down from the initial projected 4.3 percent. The output for this year was also reduced to 4.4 percent after government officials had initially pegged the GDP growth for 2020 at 4.8 percent.

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