In its latest Global Economic Prospects (GEP) report released last week, the World Bank’s researchers added ten basis points to their June 2023 forecast of Botswana's economic growth for the year 2024.
At 4.1%, the projected growth is higher than the Southern African average of 3.5% but lower than government’s own expectations that the economy will this year grow by 4.4%.
“Growth in sub-Saharan Africa’s resource-rich countries is expected to pick up in 2024 and 2025,” the GEP reads.
“Industrial commodity exporters in the region, excluding the three largest economies, are forecast to grow by 3.8% in 2024 and 4.1% in 2025, up from 2% in 2023. This uptick is due to the diminishing impact of the sharp fall in commodity prices from their 2022 peak.”
The World Bank researchers added that growth in the non-mining sectors, especially services, is expected to pick up as inflation gradually declines, particularly in countries such as Botswana, Cameroon and the Democratic Republic of Congo.
Weaker demand from China is expected to weigh on metal exports, a situation that could impact local producers such as Khoemacau and Sandfire, both of whom plan to increase their copper output this year.
Risks to the World Bank’s outlook for Botswana and the rest of Sub-Saharan Africa include an escalation of the conflict in the Middle East, which could excecerbate food insecurity and fuel prices in the region.
“A conflict-induced sustained oil price spike would not only raise food prices by increasing production and transportation costs, but could also disrupt supply chains, leading to less affordable food and an uptick in malnutrition rates in the region,” the researchers said.
While the World Bank’s projections for Botswana represent a rosier outlook for the country, the institute recently cast a cloud on the country’s long-term aspirations, citing dampened prospects and a lack of tangible drivers of growth going forward.
A recent country diagnostic report from the World Bank noted that Botswana is plagued by high levels of unproductivity, with the economy operating below the full employment of its resources, and its human capital functioning below full productivity levels.
“The public sector-led growth model built on diamond rents shows signs of exhaustion, while the economy has become more vulnerable to financial, climate and health shocks. The country needs to generate productivity gains of about two percent per year while investing more and above all better in both physical and human capital,” the report reads.
The Finance Ministry estimates that the economy needs to expand by at least six percent each year in order for the country to reach its target of high-income status by 2036. However, excluding the COVID-19 years of 2020 and 2021, growth has generally averaged around five percent and below. Between 2025-26 and 2026-27, the Finance Ministry expects growth to average 4.3%.
