Economy hit hard by Covid-19
Enforced to combat the spread of Covid-19 and ultimately save lives, the recent 49-day lockdown is believed to have cost the local economy around P16 billion.
According to First National Bank of Botswana (FNBB) Chief Economist, Moatlhodi Sebabole, although it is too early to calculate the total economic loss during the period of extreme social distancing – 3 April to 21 May – P16 billion is a plausible estimate.
The money-man explained that on average, the country’s economy generates between P300 million and P540 million daily.
“However, without a solid report on how much of the economy was operational during the period, we can only assume from zero percent activity and calculate how much the economy makes daily,” Sebabole clarified.
Indeed, the economy had already taken a hit before Botswana went into lockdown, with the tourism, mining, and aviation sectors all suffering from the global impact of Covid-19.
Worryingly, experts forecast it may take over two years for the economy to bounce back to where it was before the outbreak of Coronavirus, which to date has claimed over 472, 000 lives worldwide.
Addressing the media recently, Bank of Botswana (BoB) Governor, Moses Pelaelo reiterated that the pandemic, and the measures installed to contain it, have severally impacted economic activity, both domestically and globally.
“This has resulted in the disruption of production, supply chains, project implementation, and provision of goods and services. Similarly, consumption and spending have been disrupted, hence domestic demand pressures and foreign prices remain subdued,” noted the Governor, gravely adding that the Ministry of Finance and Economic Development and the International Monetary Fund (IMF) have similarly projected a sharp deterioration in Botswana’s economic growth.
“In the April 2020 World Economic Outlook, the IMF forecast GDP to fall by 5.4 percent this year, before rebounding to 6.8 percent in 2021, while the Ministry estimates that the economy will contract by 13.1 percent and rebound to a 3.9 percent growth in 2021,” Pelaelo told local media through a virtual press briefing.
Even with next year’s expected recovery, Pelaelo explained that the contraction in 2020 equates, approximately, to a two-loss output.
He further stressed it is tricky to make forward projections because of the current uncertainty that surrounds the duration of constrained economic activity.
“The speed of resumption of production and pace of recovery in demand is unknown at this point in time, which further adds to the difficulty in making forward projections,” the Governor concluded.