The COVID-19 pandemic is posing a monumental challenge for economic forecasters – both locally and globally. How can they look ahead with any certainty as events without modern precedent unfold at lightning speeds? So far, they cannot — which is why predictions of economic growth of countries as small as Botswana are wildly inconsistent over the past several months. Part of the problem is that classic forecasts not only rely heavily on historic trends, but also take time to determine. This crisis allows for neither.
The task to predict beats even seasoned economists amongst them Botswana’s Dr Keith Jefferis. Jeffries, who now works as senior policy advisor to the Botswana government at the Treasury has previously worked as deputy governor of the central bank – Bank of Botswana before venturing into private practice.
This week, Dr Jefferies told the Absa Botswana economic recovery Summit – held virtually that the COVID-19 crisis is unique.
“Nobody really knows the answer as to what will happen going forward, though some pretend to know. There will be a way to change how and more buffers to manage the shocks, particularly on the government side it will have to balance the fiscal side-spend to manage the economy but not overburdening itself with more debts,” he said.
Jeff Gable – Absa Group Chief Economist also painted an unclear path post COVID-19 as he says the economic recovery is still very unclear and instead the focus should also not be about the rising numbers of Covid-19 but whether economies have the pandemic under control.
Gable who is stationed at the Groups’ headquarters in Johannesburg, South Africa said jobs are still going to be in scarce supply as return to pre-pandemic activity levels will take some time.
“We still do not know how far Covid19 will turn out deadly for many economies and the lockdowns have showed us that some sectors are more critical than we had always treated them than others. Botswana has a very impressive mortality rate, however, it does not mean the global impact does not have challenges here. Countries that are more reliant on mineral commodities like Botswana this has been a very difficult period for them. The tourism sector in addition is an important driver of jobs particularly in the rural areas and was the first to be hit by the Covid19 impact,” narrates Gable.
Even as lockdowns ease and the world gets vaccines, Gable suggests that the world will not be able to catch up on the economies’ GDP to the level anticipated. African countries’ ability to lean against public debt will also mean more infrastructure development and more tax.
For the neighbouring South Africa which has the highest Covid19 positive cases in the continent, Gable indicated that the Cyril Ramaphosa led nation will get back to normal activity by 2024 as he points to real challenges lying ahead. Until the vaccine is rolled out worldwide, many economies he adds are in an environment that does not look pretty good.
While Botswana’s revenue streams have been underperforming and already the government has announced tax adjustments to help pick up the revenue generation, Dr Jefferis says the budget deficit is not a COVID-19 problem. He said the problem has always existed during the entire period of the National Development Plan 11 which is now on its sixth year. “The country’s spending is high relative to its revenue to generation”.