Tuesday, April 23, 2024

Weaker SACU and diamonds receipts to affect economy

The next few years will arguably be among the most challenging faced by the ruling Botswana Democratic Party (BDP) since it came to power in 1966, a recent report titled “Botswana Business Forecast Report Q4 2013” from Business Monitor International has revealed.

Business Monitor International is facilitated by the British global market researcher, Companiesandmarkets.com and the latest report on Botswana helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in the country and is an essential tool for CEOs, Chairmen, Finance Directors and Managing Directors, among others.

The report comes at a time when opposition parties, the Botswana National Front (BNF), Botswana People’s Party (BPP) and Botswana Movement for Democracy (BMD) have formed a coalition called the Umbrella for Democratic Change (UDC) as part of a grand plan to halt the BDP46 years of uninterrupted rule in the 2014 general elections.

The Botswana Congress Party (BCP) has since pulled out of the coalition which its proponents described as a national project after negotiations on among other things, allocation of constituencies, failed to produce the desired results.

However the latest Botswana Business Forecast Report notes that despite signs that a shift in the country’s political landscape may be under way, “we maintain that a comfortable victory for the BDP in the 2014 election remains by far the most likely outcome.”

On the country’s economic outlook, the report reveals that “A weaker outlook for Botswana’s two biggest sources of income – diamond revenues and SACU receipts – has prompted us to adjust downward our projections for the country’s fiscal balance in financial year, 2013/14 and financial year 2014/15 to -0.2% and 0.2% of GDP respectively (from 0.3% and 0.0% previously).”

A greater than anticipated deterioration in the global economy would likely have a detrimental effect on demand for diamonds, posing significant risks to our real GDP growth forecasts as well as our projections for Botswana’s current and fiscal accounts, the reports says.

“We continue to note the risks to our forecasts posed by ongoing revisions to Botswana’s national accounts estimates. Amid ongoing efforts by Statistics Botswana to more accurately portray the size and structure of the economy, GDP estimates remain subject to frequent and often notable adjustments,” says the report.

The researchers say that “Although we expect conditions to improve over the remainder of 2013, recent developments have prompted us to make slight downward adjustments to our real GDP growth forecasts for 2013 and 2014 to 4.6% and 5.0% respectively.”

In particular, the report says, the impact of a fragile external environment on the country’s all-important diamond sector will continue weigh on headline growth. Looking ahead, our outlook for Botswana’s economy remains one of solid, but constrained growth.

“We believe that inflationary pressures in Botswana will ease over the coming quarters due to the effects of a slackening in the global economy, lower commodity prices and a subdued domestic demand picture,” states the report.

With price pressures continuing to be largely transient in nature, conditions will remain supportive of the more accommodative stance adopted by the authorities in recent months.
The Botswana Business Forecast Report says “We have made slight downward adjustments to our real GDP growth forecasts for Botswana in 2013 and 2014 to 4.6% and 5.0% respectively (compared to 4.8% and 5.2% previously).”

The report also reveals that weaker than expected, growth data for the first quarter indicate that demand for diamonds – the pillar of the economy – remains muted in line with sluggish global growth.


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