2014 MACRO-ECONOMIC PICTURE MODEST RECOVERY DESPITE INSTABILITY IN MINERALS The year 2014 has been promising as the local economy bounced back to register growth in the second quarter. Presenting the 2014/15 budget in February, the Minister of Finance and Development Planning, the Honourable Kenneth Matambo said the economy was projected to register growth of 5.1% in 2014, driven by the expected growth in some non-mining sectors such as trade, hotels and restaurants and finance and business sectors. This was, however, subsequently reduced the expected growth to 4.4% as the mining sector, which contributes more than 20% to GDP, continued to face challenges. Information from Statistics Botswana shows that the economy registered a growth of 1.6% in the second quarter after a slump in the first quarter of this year. On an annual basis, real GDP grew by 4.5% in the second quarter. However, economic growth was driven mainly by non-mineral sectors as the mining economy declined. Copper-nickel-cobalt matte declined by 3% [with copper prices falling internationally] followed by diamonds which also went down by 1.3% points followed by gold with a negative growth of 0.3 per cent. On the fiscal side, the government presented a budget with a balance estimated at P1.326 billion, or 0.97% of forecast 2014/15 GDP. Partially In response to continued challenges, Parliament passed the Value Added Tax (Amendment) Bill which exempted basic food staff and farming equipment from VAT and further increased the threshold to encourage Small and Medium Enterprises. On the positive side Botswana enjoyed low inflation rate throughout the year, which remained well within the Bank of Botswana’s ideal 3-6% objective. In October and November, the annual rate stood at 4.3%, while the central bank has maintained a stable bank rate of 7.5% since December 2013. This, according to analysts, has provided a favourable climate as it meant low cost for borrowing especially businesses although there were concerns about household credit, but according to the central bank, it has slowed down, easing pressure on the financial sector. The recent reduction in fuel pump prices was also expected to further ease the inflation rate. Retail pump prices for petrol and diesel were reduced by 60 thebe on December 6 this year as international crude oil prices continued to decline and Brent prices averaged US$80.37 per barrel in November.
Posted on: Tue, 30 Dec 2014 18:41:09 +0000
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