Local businesses have revised downwards growth prospects of the local economy on the back of wide range of challenges that have worsened the operating environment. A survey by the central bank, Business Expectations Survey (BES) for the period ended March to April 2015 showed that domestic enterprises blamed the decline on output on water usage restrictions, power supply interruptions and uncertainty regarding the strength of the global recovery.
According to BES, businesses expect real GDP to grow by 4.6 percent in 2015, slightly lower than the 4.9 percent indicated in the 2015 Budget Speech. “GDP is expected to increase marginally by 4.9 percent in 2016,” the survey suggested.
“In the domestic economy, growth prospects are constrained by water usage restrictions, power supply interruptions and uncertainty regarding the strength of the global recovery. Estimates of GDP released during the survey period indicate that the economy grew by 4.4 percent in 2014, down from 9.3 percent in the previous year,” stated BES.
“Overall confidence in the prevailing business conditions (H1-2015) is at 44 percent, eight percent lower than at the time of the September 2014 survey. This was significantly lower than the 62 percent expected for this period in the earlier survey, a clear indication that expectations have been revised downwards,” it added.
The slowdown mainly reflects the weakening of the mining sector which expanded by 4.5 percent, compared to growth of 23.9 percent in the previous year. The Budget Speech, which was presented in February just prior to the commencement of the survey, forecast growth for 2015 at 4.9 percent compared to an estimate at that time of 5.2 percent in 2014.
BES noted that relative to the September 2014 survey, most businesses are less positive about the demand for their products/services in the current period and the second half of 2015. Hence, businesses generally expect only marginal increases in sales volumes and the volume of goods imported during 2015.
“Moreover, these expectations have been significantly revised downwards compared to the previous survey, particularly for production and profitability levels. Such revisions are consistent with challenging conditions reported by businesses,” it said.
According to Bank of Botswana, it undertakes the survey twice a year in order to collect information on perceptions among the local business community about the prevailing state of the economy, as well as future prospects. The survey sample covers 100 businesses in agriculture, mining, manufacturing, water and electricity, construction, trade, transport, and financial and business services. For this survey, 55 percent of surveyed businesses responded, compared to 63 percent in the September 2014 survey.