Thursday, June 4, 2020

Botswana’s big trade deficits continue…

BY BONNIE MODIAKGOTLA

Statistics Botswana’s international merchandise trade statistics show that the country continues to register trade deficits in second half of the year badly, according to data from statistics Botswana’s international merchandise trade statistics for May.

According to the monthly report, total exports in May came at P6 billion – a increase of 3.9 percent from the P65.8 billion recorded in April. The increase was due to diamonds, the country’s economic mainstay, which recorded an increase of 3.1 percent between the two months. Diamonds remained the main export, representing 92.1 percent of total exports.

The total exports value for the period under review, compared to that of May 2018 shows a decline of 9.6 percent on the account of weak diamond exports which fell by 8.3 percent this year.

Belgium, a major player in the diamond cutting and polishing industry, was the largest destination for Botswana’s exports, accounting for 23.6 percent of total exports during the month under review. Other top export markets included India and the United Arab Emirates, South Africa and Singapore.

The country’s exports were mostly destined to Asia with region representing 58.4 percent of total exports. The European Union (EU) received 25.1 percent while the Southern African Customs Union (SACU) accounted for 11 percent of exports.

On the other hand, the total imports for May were valued at P6.4 billion, up 5.2 percent from the P6.1 billion registered in April. The increase was due to diamonds, vehicles and transport equipment. Gaborone has now emerged as an important rough sales centre after the decision to move De Beers’ sorting operations and sight location to Gaborone in 2013. It imports diamonds from other De Beers mines outside Botswana.

Comparison of import figures for May and same period last year shows a jump of 56 percent due to  increase in the value of vehicles and transport equipment imports, and a four – fold increase in diamond imports. Vehicles and transport equipment also contributed significantly to the rise in total imports.

The continent’s economic giant South Africa was the major source of imports into the country with a contribution of 52.7 percent to total imports. Russia, Singapore, India and China are among top five suppliers to the country.

With regards to regional groupings, the Southern African Customs Union (SACU) contributed 53.7 percent to Botswana’s imports during the month. Asia and the EU made contributions of 14.5 percent and 9.4 percent, respectively.

With an increased import bill and slowed export receipts, the country has recorded a trade deficit of P431.6 million, a jump from the previous month’s deficit of P392.5 million. In the first quarter of the year, the country recorded a massive trade deficit close to P2 billion, thanks to a huge P2.8 monthly trade balance in February.

The country is expected to run budget deficits in the next two financial years as the government ramps up on job creation and improving civil service salaries. The budget deficit for 2019/20 is estimated at P7.2 billion or 3.5 percent of GDP, while the expected deficit for 2020/21 will slow down to P2.7 billion or 1.1 percent of GDP. The country expects to turn the corner with a budget surplus of P4 billion in 2021/22.

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