IMF raises Botswana growth forecast
Brian Benza | Friday April 17, 2015 15:57
According to the IMF’s bi-annual World Economic Outlook (WEO) report released on Wednesday, Botswana economic growth is estimated at 4.5 percent in 2015.
The new forecast is marginally northwards of the 4.2 percent growth forecast for 2015 the Bretton Woods Institution had forecast in October 2014.
The IMF forecast is, however, lower than government estimates which see 2015 growth at 4.9 percent.
Presenting the 2015/16 budget in February this year, finance minister Kenneth Matambo said growth is this year expected to be driven by the non-mining sectors including trade, hotels & restaurants, finance and banking, and social & personal services.
Government forecast is mush closer to Public Finance expert, professor Emmanuel Botlhale who estimates a growth rate in the region of five percent.
“The non-mining sector, as per the design of the Economic Diversification Drive (EDD) is expected to spur growth in 2015. Given positive global and regional forecasts, by amongst IMF, the local economy is poised to do better than it did on average in 2014. Therefore, anything to the region of five percent economic growth or better is a reasonable expectation,” he said.
In 2014, the economy grew at 4.4 percent, the lowest growth rate recorded since the economic recession of 2009, figures released by Statistics Botswana (SB) showed last week.
According to the Gross Domestic Product (GDP) statistics, the 4.4 percent growth is less than half the revised growth rate of 9.3 percent registered in 2013.
Mining, the economic back bone slowed down sharply to register a growth rate of just 4.5 percent in 2014 from 23 percent the previous year.
The water and electricity sector was the biggest drawback to the economy as the sector registered a negative growth of 18 percent in the year.
Botlhale noted that apart from water and electricity challenges, growth is 2015 is expected to be weighed down by power utilities tariff hikes as well as the six percent salary adjustment for public servants.
“The government-mandated six percent salary and wage increases and the increase in the price of utilities may have inflationary pressures and this will most likely weigh down on the economy in 2015,” he added.