Monday, July 15, 2024

Economists bullish on economic growth in 2014

Economists have painted a positive outlook for 2014 saying the growth rate will increase slightly and average 5 percent, rivaling the average 4 percent expected for the remainder of the year.

Botswana’s economic growth has been sluggish this year as it tracked the lower growth in the developed world where the accumulated debt levels presented challenges that had a direct bearing on the demand for the country’s diamonds.

“The continued focus on the reform process in the business environment I believe can play a positive role to boost domestic growth in 2014,” said Dr Grace Tabengwa, a Research Fellow at BIDPA.

Tabengwa added that it was encouraging that the non-mining sector has continued to show resilience with notable positive growth to support the overall growth. The non-mining private sector slowed down from 9.5 percent (annual growth) during the year to June 2013 when compared to 5.3 percent during the year to June 2012.

“It is fundamental that the non-mining sector activities with a potential to spearhead the diversification process continue to be awarded priority where there is a need for support to promote growth sustenance and broad based growth,” she said.

She said sectors such as the textile sector have suffered against the back drop of poor domestic and external demand in 2013. However, with government quantitative easing, a positive turnaround will emerge.

The concern is, however, since the sustainability of government support is key, more meaningful growth should be less dependent on government subsidisation. The strategy will enable other priority challenges to be addressed with the resources at government’s disposal.

“I am encouraged with the turnaround in Botswana’s performance on competitiveness and with time other sectors would perform even better as the reform process takes shape and the business environment improves,” said Tabengwa.

“More emphasis should be on the requisite infrastructure, water and electricity so that the impact they have had on production and various economic sectors can be reversed as this will boost growth generally. If the power and current water shortages improve, certainly some additions to production would contribute meaningfully to growth as well.”

She added that with the fiscal challenges which limit government ability to pursue other development projects, the budget would have to remain steadfast on restraint and selective spending mode.

Hence with the still prevalent external market challenges, growth though positive, would not return to pre-crises levels perhaps as witnessed before.

Econsult Economist Thabelo Nemaorani anticipates 2014 to be better than 2013 because of the recovering rough diamond industry and not necessarily because of the relocation of De Beers’ sales functions from London to Gaborone.

“The relocation of DTC to Gaborone is good but I believe that the trickle down effects of the relocation have been grossly over-estimated,” Nemaorani said.

He, however, said more work still has to be done to ensure that the necessary infrastructure is available to support the DTC relocation since it can be an opportunity for growth of other sectors in future.


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