Mining, water and power woes drag economy into red
Brian Benza | Friday April 8, 2016 15:30
According to figures released by Statistics Botswana, the disappointing print can be largely attributed to negative mining GDP growth of -19.7 percent as well as underperformance in the non-mining private sector.
Negative growth was also recorded in the water and electricity sectors in 2015.
Low commodities prices and sub-trend global growth resulted in De Beers diamond sales declining over 40 percent year-on-year in 2015, translating into weaker mining activity as well as an estimated fiscal deficit of 2.8 percent of GDP in 2016.
“Given the slowdown in economic activity, the government has rolled out an economic stimulus package over the next three fiscal years. This combined with an expectation of a mild recovery in diamond sales should ensure that economic activity would fare a little better than last year.
“In line with a recovery in commodities prices, we expect diamond sales to slowly gather momentum, resulting in estimated GDP growth rates of 3.1 percent in 2016 and 3.7 percent in 2017. Yet, we believe that the risks to the outlook are tilted to the downside as global growth might disappoint, while a lack of domestic fiscal implementation could drive growth lower,” said analysts at RMB Research.
Statistics Botswana figures show that the domestic economy decreased by 1.9 percent in the fourth quarter of 2015 compared to an increase of 3.9 percent accrued in the same quarter in 2014.
The decline was attributed to real mining value added, which decreased by 30.5 percent in the fourth quarter of 2015 compared to a decline of 0.2 percent registered in the same quarter of the previous year.
The decline in the value added of the mining sector is attributed to the continued weak recovery in the global markets, particularly in the major markets for diamonds.
In the fourth quarter, copper and diamond production decreased by 59.7 and 20.4 percent respectively.
During the fourth quarter of 2015, Mowana and Thakadu copper mines were put under provisional liquidation while there was also a plant shutdown at the BCL copper mine during the months of August, September and October 2015.
“For 2016, I see growth for the year as a whole at 1.5 percent to two percent, with a further slight contraction in mining but modest positive growth across the rest of the non-mining private sector,” said economist, Keith Jefferis.