Experts query Matambo�s growth projections
Isaac Pinielo | Friday February 10, 2017 12:14
Among the factors that they highlighted as the weakness afflicting the country’s economy, are the weaker commodity prices and uncertainties regarding the global economy.
A public finance expert at the University of Botswana (UB), Emmanuel Botlhale said global economic outlook is not inspiring.
“For instance, global growth was projected to slow to 3.1% in 2016 before recovering to 3.4% in 2017.
This does not very favourably compare with pre-2007 forecasts,” he said.
He explained that this gives impetus to the theory of permanent global economic crises as opposed to alternating periods of expansion and contraction.
“So, in my estimation, a growth forecast of 4.2% is overly bullish and optimistic. Hence, my low and high forecast are three percent and 3.5% respectively, not 4.2%,” Botlhale stated.
He added that the contribution by the mining sector has declined from over 50% in 1988/89 to around 20% in 2014/15, noting that the bulk of the growth must be expected from the non-mineral sector such as finance, business and services, trade, hotels and restaurants, and transport and communications. Motswedi Securities financial analyst, Garry Juma echoed the same sentiments.
He said given the uncertainties regarding the global economy particularly with regards to the policies that the US President, Donald Trump is introducing, the 4.2% projected growth might be on the topside.
“With weaker commodity prices, the Brexit and closer home the slow down of the South African economy, our forecast is a little bit lower and we forecast the gross domestic product (GDP) for the full-year 2017 to grow at a modest 3.3%,” said Juma.
In his Budget Speech on Monday, Matambo stated that the outlook for 2016 is positive, with the domestic economy expected to recover and record a growth rate of 2.9% for the year, and forecast to reach 4.2% in 2017.
“The optimistic outlook is based on the anticipated slight improvement in the mining sector, and positive growth prospects for the non-mining sectors,” said Matambo.
He has however indicated that there are downside risks to 2016 and 2017 growth prospects, such as the slow recovery in the global economy, and falling commodity prices.
Meanwhile, on the issue of job creation, Botlhale indicated that the government is ‘wedded’ to the principle of the triple-P (Public Private Partnerships) as abundantly instanced by the adoption of the PPP policy by Parliament in 2009.
“Under this regime, the intention is to move away from a government-driven economy to a private sector-led economy, inclusive of job creation.
To this end, the government must commit itself, under the Triple-P regime, to facilitate the private sector, for example, through appropriate fiscal and monetary policies, legislation, issuance of work permits etc, to drive the economy, including job creation,” he said. Botlhale also pointed out that the budget could only be delivered if water and energy are reliable with a steady supply, adding that these are key drivers of the economy.
He also expressed the need for improved project implementation, which he stated would ensure that budget objectives are translated into deliverables.
“Monitoring and controlling must accompany implementation,” said Botlhale.
“Global competitiveness and ease of doing business must also be improved to ensure deliverables.”