Tuesday, May 18, 2021

Motswedi worried leading economies, utilities will harm Bots growth

Motswedi Securities said this week it is focusing economic lower than the consensus as there are issues that could impact on the Gross Domestic Product (GDP) this year.

The research house revealed in a note titled 2014 Financial Markets Review that it remained concerned about the negative growth of the Water & Electricity sector which has been a drag to our economy.

“Botswana GDP is estimated to have grown by 5.4 percent 2014, according to the 2015 Budget Review Statement,” researchers Garry Guma and Tlotlo Ramalepa said.

“For 2015, GDP is projected to grow at a slower rate of 4.9 percent, while we project a slightly lower growth of 4.8 percent due to unfavorable developments especially from the Euro zone and Japan.”

Motswedi is bullish that upcoming projects such as establishment of a Steel Manufacturing plant in Selebi-Phikwe and horticulture Agro Processing plant which will be commissioned later during the year or early 2016 are expected to support growth in 2015.

“In addition, the P12.9bn allocation towards the development budget will support the growth of the economy,” it added.

The 2014 growth was mainly driven by non-mining sectors including Trade, hotels & restaurants, Finance and Banking, and Social & Personal Services.

But, the research and stocking outfit is worried that much of the non-mining sector growth is mainly dependant on government expenditure hence is prone to changes in government expenditure.

“We remain concerned about the negative growth of the Water & Electricity sector which has been a drag to our economy. We hope the P500mn allocation towards the North ÔÇô South Water Carrier and the P100mn allocation towards the refurbishment of Morupule A power station will go a long way in improving the water and power situation in the country,” it said.

“Developments on the global economic landscape are still a concern to us, particularly the recession in Japan, the slowdown of the Euro Zone and Chinas given these are some of our major trading partners and any slowdown of their economies will impact negatively on our exports.”

The IMF recently reduced its global growth projection from 3.8 percent to 3.5 percent in 2015. The downward revision was mainly due to the bleak prospects from China, Russia, the EU, Japan and other major oil producers. However the US was the only country whose outlook was raised as the economy has shown some resilience in GDP growth and the labour market.

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