A Business Expectation Survey (BES) published at the end of December suggests local companies anticipate cost pressures will continue rising in the first quarter of 2022.
This comes on the backdrop of an expected increase in input costs (costs incurred to create a product or service, such as direct materials, direct labor, and factory overheads) due to the second-round effects of the upward adjustment in some administered prices in 2021.
In a mixed review, despite the concerns over cost pressures, the Bank of Botswana (BoB) survey further notes businesses ultimately expect conditions to improve throughout the year.
“Furthermore, firms expect the domestic economy to expand by 4 percent in 2021, while inflation is anticipated to average 6.4 percent and 5.8 percent in 2021 and 2022, respectively,’ states the quarterly survey.
The BES samples 100 businesses from 13 economic sectors, including Agriculture, Forestry, and Fishing; Mining and Quarrying; Manufacturing; Water and Electricity; Construction; Wholesale and Retail; Transport and Storage; Accommodation and Food Services among others.
The survey says firms in all sectors are optimistic about economic recovery in the year, led by the Retail and Accommodation and Trade, Hotels, Transport and Communications; Manufacturing; and Finance and Professional and Administrative Activities sectors.
The perceived improvement in economic performance is largely attributed to the full resumption of economic activity following the end of the State Of Emergency (SoE).
Meanwhile, firms that took part in the survey also indicated they expect costs of borrowing to increase this year.
Regarding borrowing volumes, firms anticipate an increase in the stock of loans across all markets as businesses are expected to source funding to boost operations as the economy continues to recover.
