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Non-mining sectors boost economic growth

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Non-mining sectors boost economic growth
Lodge

Non-mining sectors such as trade, the hospitality industry and transport and communications industries, have assisted the economy to experience a welcome recovery in domestic growth, which according to current medium term projections is expected to continue.

National Accounts data released by Statistics Botswana in April 2017, confirmed that Botswana’s economy grew by 4.3% in 2016.

When delivering a State of the Nation Address of the fourth session of the eleventh Parliament, President Ian Khama said that the growth was driven by non -mining sectors such as Trade, Hotels & Restaurants and Transport & Communications industries, which registered an increase of 13.5% and 5.6% respectively.

He said that the key factor in boosting the hotel and hospitality sector in recent years has been the growth of downstream diamond industry activities following the relocation of the Diamond Trading Company from London to Gaborone in 2012.

“Notwithstanding the negative effects of the BCL liquidation, contraction in the mining sector was also significantly reduced last year to 3.7%, as opposed to the 19.6% we suffered in 2015.”

Khama said that in line with these trends, domestic growth is currently projected to reach 4.7% in 2017 and 5.3% in 2018.

“This positive outlook, which builds on our average 3.9% growth during NDP 10, is expected to be sustained by further improvements in the Mining, Trade, Hotels & Restaurants, Transport & Communication, and Water & Electricity sectors.”

The projected expansion of the Water & Electricity sector, largely resulting from an additional unit at Morupule B power station and the restoration of Morupule A, is further expected to boost other sectors of the economy.

It is also further anticipated that diamond production will increase, mainly due to a recovery in global demand, particularly in advanced economies.

“According to the International Monetary Fund’s (IMF) most recent World Economic Outlook report, released in October 2017, global economic growth is projected to increase from 3.2% in 2016 to 3.6% in 2017 and 3.7% in 2018.”

Despite this modestly positive outlook, Khama said that medium term downside risks remain, including prolonged policy and political uncertainty in both advanced and emerging economies.

“Advanced economies are now expected to grow at 2.2% in 2017 and 2.0% in 2018, improving on the 1.7% attained in 2016.”

President Khama also said that it is heartening to note that the inflation rate has been, and is expected to remain at the lower end of the Bank of Botswana’s medium-term objective range of 3 – 6%.

Since the beginning of this year the rate hovered between 3.1% and 3.5%.

“I am further pleased to report a positive trend in our balance of trade. According to Statistics Botswana, total imports for 2016 were valued at P66.9 billion, against P73.2 billion recorded in 2015, representing a fall of 8.6%.”