Wednesday, September 30, 2020

Central bank pegs 2019 GDP growth at 4.2%

BY KABELO SEITSHIRO

Botswana’s 5.1 percent growth in real Gross Domestic Product’s (GDP) as at September 2018 has been attributed to recovery in mining output and continued improvement in non-mining sectors.

According to the central bank ÔÇô Bank of Botswana, mining output in Botswana expanded by 4 percent in the year to September 2018, compared to a contraction of 12.4 percent in the corresponding period ending September 2017.

Fast forward to 2019, the central bank governor – Moses Pelaelo said this past week that the domestic GDP is projected to increase by 4.2 percent in 2019, lower than the estimate of 4.5 percent for 2018.

Speaking the launch of the 2019 Monetary [Policy Statement (MPS) Pelaelo said that the significant influences on domestic economic performance include conducive financing conditions as indicated by accommodative monetary policy and sound financial environment that facilitates policy transmission, intermediation and risk mitigation.

“It is anticipated that an increase in government spending, as well as implementation of initiatives such as the doing business reforms, should also be supportive of economic activity,” said Pelaelo.

At the same time, Pelaelo said that it is anticipated that the domestic economy will operate close to, but below full capacity in the short to medium term, thus posing no upside risk to the inflation outlook.

Meanwhile BoB says the global output is expected to grow by 3.5 percent in 2019, from an estimated expansion of 3.7 percent in 2018. The bank said protectionist trade policies, tightening financial conditions, a no-deal Brexit and weaker growth in China than currently projected could negatively affect the medium-term growth prospects. Regionally, the South African Reserve Bank forecast an improvement in growth to 1.7 percent in 2019, from an estimated 0.7 percent in 2018.

As a result of the projections, the BOB Monetary Policy Committee announced last week that it has decided to maintain the Bank Rate at 5 percent.

“Subdued domestic demand pressures and the modest increase in foreign prices contribute to the positive inflation outlook in the medium term,” reads part of the MPC statement.

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