Businesses are starting to see a recovery within a year after the Covid-19 pandemic containment measures hampered economic activity and led to Botswana’s most severe economic contraction, reveals data from Bank of Botswana’s recent Business Expectations Survey (BES).
The quarterly survey covering the period between July and September 2020 indicated that firms were less pessimistic about economic activity in the third quarter of 2020 compared to the previous quarter. The survey by the central bank collects information on the domestic business community’s perceptions about the prevailing state of the economy and prospects from from100 businesses across the key eight economic sectors that make up Botswana’s gross domestic product output (GDP): agriculture; mining; manufacturing; water and electricity; construction; trade, hotels and restaurants; transport and communications; and finance and business services.
According to the survey report, businesses anticipated output to be stagnant, an improvement from the June Survey were output contracted as the country went through a nationwide lockdown that stretched from beginning of April to the third week of May. The severe lockdown was in response to five recorded cases of Covid-19. The positive cases have since spiked to 5,285 cases and 24 covid-19 related deaths by the end of October 2020.
While business expected the GDP to contract by 12.4 percent, the economy shrunk by a bigger margin, contracting by 24 percent reported as by Statistics Botswana for the second quarter of 2020, which covers the same period as the survey. Firms that were worried about a contraction the economy turned out to be right as they experienced a significant fall in economic activities.
According to the GDP data for the second quarter, the steep reduction in the domestic economy was observed across all sectors except government, agriculture and water and electricity. Between June and August, government became the major contributor to GDP for the first time in many years, contributing 19.7 percent of the P36.8 billion nominal GDP, moving from the usual third place to replace the usual frontrunner trade, hotels and restaurants which contributed 16.5 percent to GDP. The finance and business sector retained its second spot as the main contributor to output at 16.7 percent.
However, firms across all sectors are optimistic about economic recovery in the twelve-month period to September 2021, led by the mining and quarrying sector. The perceived less sluggish economic performance in the current survey compared to the previous one is associated with the gradual easing of COVID-19 travel restrictions and resumption of business operations, the report said.
“Confidence in the domestic market-oriented firms is mainly driven by firms in the trade, hotels, restaurants, transport and communications; and manufacturing, water and electricity sectors. Similarly, export market-oriented firms are optimistic about business conditions in the fourth quarter of 2020 and in the year to September 2021. These firms are predominantly in the mining and quarrying business, which is expected to increase output in the fourth quarter of 2020 and the next 12-month period, as trade conditions improve,” wrote the authors of the survey report.