Diamonds, Morupule B power GDP data
Brian Benza | Wednesday January 8, 2014 15:37
According to recently released numbers by Statistics Botswana, real GDP increased by 7.1 percent in the third quarter of 2013 compared to an increase of 2.9 percent realised in the same quarter of 2012. In the first and second quarters of 2013, the economy grew by 4.5 and 7.4 percent on the annual basis respectively.
The substantial third quarter growth is attributed to mining, water and electricity and general government which recorded higher growths of 21.2, 68.2 and 7.2 percent respectively.
All other sectors also recorded a positive growth, of more than 3.0 percent over the period. 'The substantial increase in real value added of the mining sector was due to a 23.8% increase in the diamond production compared to a decrease of 36.7% realised in the same quarter of 2012,' says a statement from Statistics Botswana.
'The value added of Water & Electricity increased by 68.2 % in the third quarter of 2013 compared to a decrease of 31.4 % recorded in the same quarter of the previous year,' says the statement. The higher increase is attributed to a substantial increase of 238.0% in local electricity generation recorded in the third quarter of 2013. Before the breakdown of Unit 3 in December, the troubled Morupule B generated up to 450 MW of power in the third and fourth quarters of last year.
This has led to a decrease in the importation of electricity by 49.9% hence a decrease in the intermediate consumption, which in turn increased the value added.
Although mining increased in the quarter, its contribution to the overall GDP continues to wane as total output stagnates while diversification efforts has seen other sectors such as business services and trade pick up.
The mining sector, which has for decades been the mainstay of the economy with input above 40%, contributed 22.7 % of total GDP in the third quarter of 2013.
The mining slowdown can largely be attributed to among other factors, the increase in diamond production by Debswana. From as high as 34 million carats in 2007, diamond production has plateaued in the past four years as Debswana caps production to match weakening market conditions, while on the other hand there has not been any significant production increase from other big mining players such as Tati, BCL or Botash.
The Ministry of Finance and Development Planning (MFDP) projects the economy to grow by 4.4 percent in 2013.
Government economic projection is marginally above the IMF, which estimated, in a recent publication, that Botswana's real GDP will grow by 3.9 percent in 2013 on the back of a strong non-mineral GDP growth and an anemic mining sector.
According to the IMF, growth is expected to pick up slightly to 4.4 percent in 2014 supported by the base effect of increased electricity production and a recovery in the mining sector and subsequently stabilise at around 4 percent.