A January 2017 report by the Standard Bank Group titled ‘Africa Markets Revealed’ posits that Botswana’s economic outlook is “looking up” with some improvements expected ahead.
The optimistic outlook by the report suggests that the country might possibly have overcome its deepest economic engulfment implying therefore that the worst should not be expected to be lurking.
However, when talking about the economy, it does matter which participants in it the analysis is referring to. Case in point, the local economic think tank, E-consult made observations in its 2016 fourth quarter analysis that economic data showed improvements in macroeconomic conditions.
The think tank highlighted the Gross Domestic Product (GDP) growth which was recorded at 0.9 percent. It attributed the growth to the global diamond market and reduced impact of the production cuts that were done in the previous year due to sluggish market demand.
“The value of diamonds sold through De Beers Global Sightholder Sales in 2016 was nearly 40 percent higher than in 2015, leading to an improvement in the balance of payments and government revenues.
“Inflation picked up slightly to 3 percent, but is still at the lower end of the Bank of Botswana’s inflation objective range, and interest rates were maintained at historically low levels,” it says.
It also says that “for many people and firms, however, economic conditions continue to be tough.”
The analysis by E-consult demonstrates that even though the economy registered an improvement the effect trickles down differently across various participants of the economy.
The mining activities, particularly the diamond sector, might have injected some bit of life to the economy, to people and firms the challenges prevail. This perspective begs the question of whether the improvement, which is cited in numbers, should be applauded if the people and business owners continue to see the inside of the engulfment.
This also ignites the red-hot debate of an economy measured through numbers, which speaks to its growth and an economy measured through qualitative changes in the standard of living which speaks to development.
E-consult suggests a lag between economic growth, which is what the country is experiencing an upside of, and economic development, which is what seems to be lacking given the stick point faced by people and firms.
The Africa Markets Revealed report also sees improvements in terms of numbers. “We believe that a normalisation of rainfall patterns in the coming year should help lift agricultural activity and help ease the power situation further. To be clear, after four consecutive quarters of deep contraction, the agricultural sector is back in the black,” it says.
It also mentions the recent efforts by De Beers to do with sales and diamond grading which appear to be paying off as demand for Botswana diamonds seems to be recovering despite what it deems to be still a relatively weak global environment.
The report acknowledges challenges in the economy which it suggests can be abated if the diversification efforts are significantly bolstered which as a result will spur growth. The bank’s titans say in that regard that they will closely look for progress on the implementation of the government’s medium term plan (NDP 11), which, in principle, seeks to deepen overhead infrastructure in the construction, energy, tourism and transport sectors.
“For now, we look for the rebound in GDP to extend into 2018, when we forecast it to grow by 4.5 percent y/y,” they say. This positive outlook, they say, is however threatened by risks which include “deterioration in global demand conditions for diamonds, slow implementation of NDP11, and the lagged consumption impact of recent mine closures.”