Friday, June 21, 2024

Botswana recorded worst economic decline among resource-intensive economies

For each 2022 day that Botswana was not generating enough power or not selling enough diamonds or consumer goods, it was declining precipitously in continental rankings.

That is the analysis of the African Development Bank in its 2023 edition of Africa’s Macroeconomic Performance and Outlook. The Bank says that on the whole,average growth across other resource-intensive economies declined to an estimated 2.8 percent in 2022 from 4.7 percent in 2021. The deceleration reflected inadequate electricity generation, subdued household consumption spending because of high inflation, and weak global demand.

“Botswana topped the list of declines with a decline of 7.1 percentage points in 2022, much deeper than Burkina Faso (4.3 percentage points), Zimbabwe (4.2 percentage points), South Africa (3.0 percentage points), and Ghana (1.8 percentage points),” says the Bank, adding though that average growth for resource-intensive economies is projected to remain stable but lower, at 3.0 percent, and to increase in 2024 to only 3.4 percent.

The increase will be a result of the resumption of full-scale mining operations after the devastation of COVID-19. However, downside risks still loom large and those that the Bank mentions are: a steep slowdown of the global economy, persistent inflation, prolonged tightening of global financial conditions, the high cost of capital, domestic currency depreciations, lower financial inflows, continuing losses and damages due to climate and other adverse extreme weather–related shocks, continuing overdependence on exports of raw materials, low rates of COVID-19 vaccination, geopolitical tensions and a further escalation of Russia’s invasion of Ukraine and planned national elections in 30 African countries—including South Africa and Zimbabwe’s. The Bank warns that the latter “could increase uncertainty over sustained policy and political stability and weaken investor sentiments.” It also warns that “if Russia’s invasion of Ukraine is prolonged, it could perpetuate already elevated global uncertainty, raise food and energy prices, and increase sovereign debt vulnerabilities and debt levels in many African countries.”

Despite its difficulties and as result of improved trade revenues, Botswana was able to turn from current account deficits in 2021 to surplus in 2022.

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