GDP suffers huge fall

Kabelo Adamson
HIT HARD: Mining sector

The latest figures released by Statistics Botswana (SB) show that Gross Domestic Product (GDP) declined by 24 percent during the second quarter of the year.

According to the numbers, real GDP between April and June was P18.8 billion, compared to the revised P25.1 billion recorded in the first quarter of 2020.

Giving further perspective to the worrying drop, over the corresponding three-month period last year, Botswana’s GDP went up by 3 percent.

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The reduction was consistent across most sectors, with only Government, Agriculture and Water and Electricity posting positive results.

The poor performance is attributed to the impact of measures put in place to contain the spread of Covid-19.

According to the availed data, the Mining sector, which is the mainstay of the economy, was the hardest hit, suffering a 60.2 percent decrease in value-added, mostly influenced by diamonds and coal.

During the period, diamond production went down by 67.0 percent, while coal production decreased by 40.7 percent.

“Diamonds are luxury goods and therefore are bound to fluctuate due to the appetite of reliable customers as the world is highly affected by the outbreak of Coronavirus pandemic,” states the report.

With regards to coal, the remedial works at Morupule B power plant are said to have impacted negatively on the mineral’s uptake and consequently resulted in a decline in production.

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Trade, Hotels, and Restaurants was another badly affected sector, with real value-added going down by 40 percent. This is compared to a 5.1 percent increase during the same quarter last year.

One of the main reasons behind the decline in this sector is the suspension of air travel and closing of Botswana’s borders following the outbreak of Coronavirus. This means that since April when the country first went into lockdown, tourists have virtually been non-existent.

The Manufacturing industry suffered a similar fate, recording a decline of 31.3 percent in real value-added compared to a growth of 3.5 percent seen in the corresponding 2019 time frame.

The steep reduction is attributed to a massive decline in the sub-industries of Beverages and Other Manufacturing, which includes diamond processing, by 58.5 and 32.3 percent respectively.

The production of beverages, including Chibuku and beers, declined by a whopping 84.2 percent as alcohol sales were banned during the lockdown.

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The Construction industry was also affected as major works were halted during most parts of Q2, with the industry experiencing a 36 percent decline compared to a growth of 3 percent registered over the same period last year.

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