Business confidence recovers as economy rebounds
Isaac Pinielo | Wednesday June 21, 2017 18:00
According to the survey, optimism amongst businesses strengthened from a confidence level of 43% in last year’s second half to 48% for the current survey period, and is expected to rise further in the survey horizon for both domestic market-oriented firms and exporters.
The economy grew by 4.3% in 2016 up from a negative of 1.7% in 2015.
In line with previous trends, the BoB survey shows that more firms expect better business conditions going forward, with an overall confidence level of 55% for the second half of 2017 and 67% for the twelve-month period to June 2018.
Similarly, the confidence level of export-oriented businesses increased from 42% in the second half of last year to 50% in the first half of this year and it is anticipated to remain the same in second half of this year, before recovering markedly to 75% in the second half of this year to the first half of 2018.
Thus, the overall expected upswing in business confidence for 2017 and the first half of 2018 is due to a more positive outlook by both export and domestic-oriented businesses.
However, firms seem to have developed some uneasiness with the business conditions as their confidence level for the period declined by three percentage points compared to their perceptions about the same period in the previous survey.
“This lower confidence level is also reflected in the lower growth forecast of 1.9% for the domestic economy by local businesses,” the survey said.On average, businesses expected real gross domestic product (GDP) to have grown by 1.9% in 2016 and 2.3% in 2017, up from a contraction of 1.7% in 2015.
The BoB survey shows that businesses’ expectations of economic growth for 2016 are much weaker than the 4.3% estimated by Statistics Botswana. Nonetheless, the expected growth by firms for 2016 also suggests an improvement over the contraction of 1.7% realised in 2015, and is consistent with the improving business confidence.
On capacity utilisation, investment, input costs and employment, 80% of businesses expect to utilise at least half of their productive capacity in the first half of 2017 compared to 85% in September 2016, consistent with the downward revision in expectations about levels of production, volume of sales and profitability in the first half of 2017.
A total of 100 businesses participated in the survey ranging from agriculture, mining, financial services, manufacturing and trade. The survey indicates that 20% of the respondents anticipate operating below 50% of their productive capacity in the current period, while 56% expect to produce between 50% and 80% of their capacity.
The remaining 24% of the businesses expect their productive capacity to exceed 80%.