Economy - Botswana is poised to experience a slight pick-up in the economy this year on the back of rising diamond exports, falling inflation and loose monetary policy, coupled with continued investment in developing new mining industries in the country, according to a forecast by the UK-based Business Monitor International (BMI).
“We forecast real GDP growth of 4.7 percent in 2014 (from an estimated 4.4 percent in 2013), followed by 4.9 percent in 2015,” BMI said in a brief, made available to PANA here Saturday.
BMI said it believed that the Bank of Botswana would continue with its accommodative monetary policy through 2014, in a bid to stimulate domestic demand.
“The latest interest rate cut of 50 basis points in December 2013 is in line with this stance, and with price growth at multi-year lows there is scope for the bank to make further cuts if necessary.
“We believe that Botswana will continue in its bid to rebuild its fiscal buffers with its next budget, due in February, through clamping down on current spending,” said BMI, noting that the southern Africa country “may struggle to do this in an election year, though improved export receipts will help it in its aim.”
With general elections due in October 2014, political parties in Botswana are beginning their campaigns.
According to the BMI forecast, the ruling Botswana Democratic Party will maintain its dominance as the opposition coalition has begun to fragment already.
“Participation rates are in focus, with a campaign to increase voter turnout underway, though this is unlikely to have great bearing on the election given its current success rate,” the firm observed.
However, BMI noted risks to its forecasts posed by ongoing revisions to Botswana's national accounts estimates.
“Amid ongoing efforts by Statistics Botswana to more accurately portray the size and structure of the economy, GDP estimates remain subject to frequent and often notable adjustments.
“Given Botswana's dependence on imported energy and food any unexpected rise in global food or oil prices beyond our current projections would pose a risk to our growth outlook,” the firm added.