Stanbic Bank’s Q4 economic outlook for Botswana
Botswana’s economic growth decelerated from 5.5 per cent in 2022 to 2.7 per cent last year, below the long-run potential growth of 4 per cent. A sharp decline in diamond trading and mining activities was the main contributor to the slowdown, as global demand for rough diamonds decreased. At the same time, Inflation has remained below the ceiling of the central bank’s medium-term objective range since July last year. CNBC Africa is joined by Kealeboga Mogodi, Head: Business & Commercial Sales, Stanbic Bank Botswana.
Thu, 10 Oct 2024 16:25:00 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Stanbic Bank's efforts to stimulate local demand through rate cuts amidst weak economic conditions and manageable inflation.
- Botswana's fiscal targets face hurdles with a lowered GDP growth forecast and a growing budget deficit fueled by declining mineral revenues.
- Growing private sector participation in diversifying the economy away from mineral dependence offers hope for economic resilience.
Botswana's economy faced significant challenges in the past year, with economic growth decelerating from 5.5 percent in 2022 to 2.7 percent in 2023, falling below the long-run potential growth rate. A decline in diamond trading and mining activities due to global demand shifts was a major factor in the slowdown. Inflation, however, remained within the central bank's target range. To provide insights into the current economic landscape in Botswana, CNBC Africa invited Kealeboga Mogodi, the Head of Business and Commercial Sales at Stanbic Bank Botswana, for an in-depth discussion. Mogodi highlighted the central bank's recent rate cuts to stimulate local demand and combat disinflation. The bank has made three rate cuts since November 2023, lowering rates from 2.65 percent to 1.9 percent. Although inflation has risen to 3.9 percent, driven by transport costs, the outlook suggests a potential decline with dissipating fuel price effects. Food inflation, however, remains a concern due to a decrease in vegetable supply caused by South African import bans. Mogodi indicated that while further rate cuts are possible, the central bank may adopt a wait-and-see approach to gauge their impact on the economy. Regarding fiscal targets, Botswana is facing challenges as the IMF revised the GDP growth forecast from 3.6 percent to 1 percent, attributing the decline to reduced diamond production. The country's budget deficit is expected to reach 6 percent, necessitating tough decisions on infrastructure projects to boost returns amid falling mineral revenues. Mogodi emphasized the reliance on diamond sales for government revenue and foreign reserves, calling for a mix of local and foreign debt to fund the expanding deficit. Despite these challenges, private sector involvement is growing, with a focus on diversifying the economy beyond minerals. Public-private collaborations are driving investments in sectors like agriculture and manufacturing to reduce dependence on the volatile mineral sector. Optimism for Botswana's economy stems from strength in the tourism and service sectors, alongside emerging opportunities in manufacturing and recovery in copper mining. The shift towards non-mineral sectors signals a positive trajectory for economic resilience and growth in the country.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.
