IMF upholds 4.4% Bots growth forecast
Brian Benza | Friday October 10, 2014 17:11
In its latest World Economic Outlook (WEO) report released on Wednesday, the Fund said the Botswana economy would grow by 4.4 percent before the growth rate slows to 4.2 percent in 2015.
After the economy grew at a faster than expected rate in 2013, at about six percent, the IMF stated that real GDP growth is expected to moderate to 4.4 percent in 2014. The slowdown in diamond recovery and continued problems in electricity production and water supply will likely soften the pace of economic activity.
The IMF projections also tally with local economists who predicted growth to be likely restricted to lower than five percent in 2014. This is in part due to water and electricity shortages that have disrupted production across all economic sectors.
Powered by a rebound in diamond production, the economy beat analysts expectations to grow by an impressive 5.9 percent in 2013 reversing a three-year streak in which the economy grew at a slowing rate.
According to Ministry of Finance projections, the domestic economy is expected to grow moderately by 5.2 percent in 2014 and a further 5.0 percent in 2015, underpinned by an expected recovery in diamond production. Government 2014 economic growth projections are slightly higher than other analyst’s estimates including that of the International Monetary Fund (IMF).
Figures released by Statistics Botswana (SB) last week showed that a fall in production in the mining sector slowed down the economic growth rate in the second quarter of the year.
On a year-on-year basis, SB announced that Gross Domestic Product (GDP) growth was at 4.5 percent in the second quarter of 2014 from 7.3 percent in the same quarter of last year. The economy grew by 5.2 percent in the first quarter of this year.
According to SB, the largest contributor to a slower economic growth rate was a fall in mining output, predominantly diamond and copper.
“All other sectors recorded a positive growth of more than 1.5 percent over the period. The exception is mining which recorded a decrease of 3.8 percent.
“The decrease in the real value added of the mining sector was attributed to diamond and copper or nickel production which registered a negative growth of 1.5 and 21.3 percent respectively,” stated the Statistics agency.
De Beers’s figures show that Debswana output was two percent lower to 6.26 million carats in the three months to June 2014, largely due to a production decline at Jwaneng and Letlhakane mines.
Looking at the region the WEO said Sub-Saharan Africa’s economic growth remains strong and should accelerate to 5.8 percent in 2015 but if the Ebola outbreak in its western corner is protracted or spreads it will have “dramatic consequences” for that zone.
The Fund said Africa should repeat 2013’s growth rate of 5.1 percent this year and then accelerate in 2015 as infrastructure investments boost efficiency and the service sectors and agriculture flourish.
The 2015 forecast were an improvement on the 5.5 percent growth for the overall region projected by the IMF in April. “This overall positive outlook is, however, overshadowed by the dire situation in Guinea, Liberia, and Sierra Leone, where the current Ebola outbreak is exacting a heavy human and economic toll,” the report’s Sub-Saharan Africa section said.