Economy generally grows past pre-COVID levels

Mbongeni Mguni | Monday April 10, 2023 06:00

According to figures released by Statistics Botswana last Friday, the water and electricity sector led the pack in terms of growth last year with 48.6%, while value added by diamond traders rose 17.6% followed by manufacturing with 8.2 percent and mining/quarrying with 7.5 percent.

In terms of their contributions to the Gross Domestic Product (GDP), the measure of economic activity, mining and quarrying leads the pack, followed by public administration and defence, and the construction and wholesale industries.

“The economy and most of its various sectors have largely surpassed the pre-pandemic levels of performance,' Dr Lovemore Taonezvi, a lecturer at Ba Isago University’s Faculty of Commerce, told BusinessWeek. “While most sectors have exceeded their pre-pandemic economic performance levels, key sectors such as agriculture, forestry and fishing, construction and real estate activities are yet to surpass their pre-pandemic levels.

He added: “In terms of the economy's performance, one has to look at the real GDP per capita figure for 2022 of P81,154.10 which is higher than the real GDP per capita figure of P79,088.30 recorded in 2019 – the year before the effects of the pandemic hit the economy. “The real GDP per capita for 2022 is also the highest since the year 2006.”

Taonezvi, who holds a PhD in Economics, said the recent GDP figures indicated an economy that had widely recovered from the negative impacts of the pandemic, although there were some key sectors still grappling to overcome COVID-19’s effects.

“The government and the Bank of Botswana, through prudent fiscal and monetary policy interventions, did exceptionally well to counter the negative external shocks stemming from the instability in Eastern Europe,” he said. “In the face of such crippling external shocks, the economy still managed to register moderate growth and the normalised GDP.”

Taonezvi said at 5.8 percent for 2022, growth in the economy was normalising or stabilising, following the deep contraction of 2020 and the 11.9% surge in 2021. He explained that the 'hefty' 11.9% growth rate recorded in 2021 was mainly because the GDP growth figure was being calculated from a very low figure experienced in 2020 owing to the pandemic.

“Therefore, the deceleration of growth to 5.8 percent in 2022 largely indicates normalisation and stabilisation of growth since this figure is generally comparable to the pre-pandemic growth rates,” he said.

The 5.8 percent growth recorded for 2022 is significantly above the International Monetary Fund’s projection of 4.1 percent, but below government’s own revised expectation of 6.7 percent growth, as announced in the February budget speech.

Finance Minister Peggy Serame, has said growth in 2023–2024 should decelerate to four percent, before rising to 5.1 percent in 2024–2025. Both figures are below the 5.7 percent level required for the country to reach high-income status by 2036.