In the IMF’s April 2012 edition of the World Economic Outlook (WEO) report released this week, the organisation said Botswana’s economy would maintain a moderate average growth rate, which will stagnate at 4.1 percent in 2014.The IMF projection is however slightly lower than the average growth rate for the sub-Saharan region which is forecast to expand by 5.5 percent.
“Growth is projected to reach 5.5 percent in 2013, only marginally lower than forecast in the October 2012 WEO. The generally strong performance is based to a significant extent on ongoing investment in infrastructure and productive capacity, continuing robust consumption, and the activation_of new capacity in extractive sectors. In 2014, regional economic growth is projected to be about 6 percent. A main driver of growth in 2014 will be the strengthening of activity in South Africa,” reads the WEO report.
In the budget speech in February, Finance Minister, Kenneth Matambo talked of a 2012 growth rate of 6.1 percent but figures recently released by Statistics Botswana show that the economy only managed a 3.7 percent acceleration last year. The deceleration in real GDP growth was mainly due to the mining sector which recorded a decrease in value added of 8.1 percent in the year. The decrease was largely due to a 14.7 percent drop in diamond production to 20 million carats last year. In 2011, diamond production increased by four percent to 23 million carats.
The mining sector, whose total contribution to the GDP fell to 19.6 percent last year from 24.7 percent in 2011, has recorded negative growth in each of the last four years except in 2010. Traditionally, mining has contributed over 30 percent to the GDP but the slump in output and the gradual growth of other sectors through the economic diversification drive has changed the picture. On Inflation, the April WEO report predicted the downward trend of the Botswana CPI to continue at 7.2 percent this year, from 7.5 percent in 2012.
Prices of goods and services in Botswana rose at a slower rate of 7.5 percent in 2012 compared to 8.5 percent in 2011.Statistics Botswana says average inflation for last year eased to 7.5 percent from 8.5 percent, 6.9 percent, 8.2 percent, and 12.6 percent in the previous four years respectively.
Among the chief drivers of inflation last year included fuel prices, which went up three times by a cumulative P1.50 per litre, water tariffs (10 percent), food, alcoholic beverages through the levy, and other administered prices and government levies. The WEO expects the current account balance to be positive at 3.9 percent of GDP in 2013, pointing to stronger exports of goods, services and assets over imports.