The latest set of data from the national statistics agency shows that the country’s nominal Gross Domestic Product (GDP) for the second quarter of 2021 was P49, 688.4 million compared to P47, 603.9 million registered during the previous quarter.
This represents a quarterly increase of 3.9 percent in nominal terms between the two periods. Statistics Botswana says during the quarter under review, the improvement in economic output was largely anchored by major expenditure by the government, with Public Administration and Defence.
According to the official data, Public Administration and Defence became the major contributor to GDP by 18.5 percent, followed by Mining & Quarrying by 14.2 percent.
Statistics Botswana has however cautioned that the estimates are provisional and subject to change.
“First estimates are normally based on limited data and hence cannot be precise and absolute. The figures are revised after receiving finalized or audited data from companies in which some differences and inconsistencies in the previously published data may be observed,” said Dr. Burton Mguni – Statistician General.
Botswana’s National Accounts are compiled according to the 2008 System of National Accounts (2008 SNA) framework. The latest set also shows that Real GDP for the second quarter of 2021 increased by 36.0 percent compared to a deep contraction of 26.0 percent registered in the same quarter of the previous year. The suppressed economic activities in the corresponding period of 2020 have lowered the usual baseline of the overall economy and which is also evident in most sectors of the economy.
Though the retreat in economic activity is largely attributed to Covid-19 containment measures, Botswana’s economic cogs were already grinding slowly before the pandemic, creating extra pressure to the nation’s ballooning budget deficits and structural problems such as a poorly diversified economy and the soaring jobless numbers.
From 2010 to 2018, the GDP had an average growth rate of 3.7 percent, reflecting a gradual decline in economic growth over the ten-year period. GDP growth further slowed to 3 percent in 2019, down from 4.5 percent recorded in 2018. At these rates, Botswana’s economy is said to be operating below potential output, which experts have suggested should be above 6 percent for the economy to create the much-needed jobs.
The revival in GDP growth in the first quarter of 2021 was largely anticipated given the low base effect, but yet even this growth remains fragile as economic experts differ on the level of recovery.
The country is set to benefit from increased diamond production this year, backed up by increase in diamond prices riled up strong demand from key consumer markets.
As a top producer of rough diamonds by value, Botswana is benefiting from the rise in prices. The global rough diamond price index increased by 7.4 percent from 143.9 points in the first quarter of 2021 to 154.6 points in the second quarter of 2021 as most countries continued to ease COVID-19 restrictions and rolled out effective vaccines, thus, improving manufacturers’ demand and trade for rough diamonds.
Prices also rose for polished diamonds, with the global polished diamond price index increasing by 1.4 percent from 207.7 in the first quarter of 2021 to 210.7 in the second quarter, as the polished diamond market showed signs of improvement due to continued increase in demand from the US and China.