Wednesday, June 7, 2023

Economy shows signs of recovery — Jefferis

Botswana’s economy was on track of emerging out of recession by the end of the fourth quarter, as mining showed some significant recovery, adding on the gains of the resilient non-mining sector, head of Ecosult and Chairman of Botswana Insurance Fund Management (Bifm), Keith Jefferis, said.

“As with the international economy, the domestic economy is ending the year generally in a better shape than it started. Diamond production has restarted and has recovered faster than had been initially anticipated.

“Inflation has continued to fall steadily. The non-mining sector of the economy has continued to perform well, and has seemingly managed to shrug off the effects of the global crisis and the slowdown in the mining sector,” he said.

The mining industry, which is the backbone of Botswana’s economy has been hit hard by the international crisis leading to the temporary suspension of diamond production at some of Debswana mines.

Debswana, which is a 50/50 percent shareholding between De Beers and Botswana government, accounts for 33 percent of the GDP and over 55 percent of the government revenue.

Base metals were also affected by the crisis prompting massive “voluntary separation plans” that aggravated the unemployment rate in the country during the course of 2009.

Since the third quarter of the year, copper/nickel has staged some dramatic recoveries from their lows. Copper managed to score 150 percent growth while nickel was little behind at 100 percent in price terms.

As of the close of last year, there were two schools of thought on the unemployment rate in the country. One argued that it urged up to 27 percent while the other said it remained almost flat at 17 percent. The latter indicated that Ipelegeng (labour intensive public works) employed as much as 68,000 peopleÔÇöthus reducing the unemployment rate in the country.

“Over the year to September, the total GDP contracted by 4.6 percent. During this period, there was a major slowdown in mining which contracted by 31.4 percent whereas the non-mining private sector grew by 8.9 percent. The non-mining sector has continued to show resilience in the face of the global financial and economic crisis,” he said.
“The most recent quarter (July-September) indicates a different trend, with overall GDP 4.1 percent higher than in the previous quarter. However, this was largely driven by recovery in the mining sector (output up 2.3 percent) and the expansion of government at 10.4 percent while the non-mining grew 0.8 percent,” he said.
However, Jefferis warned that the situation is somewhat fragile since a lot still depends on the economic performance of the developed countries whose benefits from the present upturn is a bit slower.

The views are largely influenced by a number of factors such as the subdued demands of luxury goods as diamonds during the traditional best selling period which is around festive season.
Although the rough diamond prices somewhat recovered in the latter part of 2009, the jewelry prices experienced sluggish growth as sales in that period were “disappointing”.

“The retail market is still weak, particularly in the USAÔÇödiamonds best marketÔÇöand the Christmas sales were disappointing,” the research said, concurring with the market view that the situation will get back to normal by 2012.


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