IMF expects Botswana’s growth to top Africa
Mbongeni Mguni | Monday October 18, 2021 06:00
The IMF’s World Economic Outlook released this week indicates that researchers at the institute expect Botswana’s growth this year to considerably beat its sub-Saharan peers, with Seychelles second at 6.9 percent, Burkina Faso third with 6.7 percent and Cote d’Ivoire fourth with six percent.
Regionally, Zimbabwe is forecast to come second after Botswana in terms of growth with 5.1 percent, followed by South Africa with five percent and Lesotho with 2.8 percent. Botswana’s forecast growth is also comfortably above the sub-Saharan average of 3.7 percent forecast by the IMF.
While the IMF did not provide reasons for its improved forecast for Botswana, local fiscal authorities have said they expect the resurgent performance of the minerals sector, led by diamonds, to power the economy’s bounceback from the COVID-19 induced recession last year. The finance ministry recently revised its forecast for 2021 from 8.8 percent to 9.7 percent, as data from diamond mining showed a better-than-expected performance.
The mining sector, anchored largely by diamonds, is expected to rebound 34% in the current financial year, then 3.5 percent in 2022-2023 and two percent in 2023-2024. The bounce-back in the recurrent financial year is significant given that mining shrank by 26% last year and has generally been underperforming in previous years.
The sentiments are shared by leading credit ratings agency, S&P, which recently upgraded its outlook for Botswana from negative to stable.
“We anticipate the economic recovery will largely be driven by a strong performance of the mining sector starting 2021,” S&P researchers stated. “We expect Botswana’s diamond export-dependent economy will rebound by 8.5 percent in real terms in 2021 because the diamond industry is rebounding from 2020’s large pandemic-induced contraction.”
The latest trends in mining are also reflected in an index on mining produced by Statistics Botswana, which recently showed a 185.6% change in the year-on-year performance of mining as at the end of the second quarter. Nearly all of the change was attributable to diamonds.
“Diamond production increased by 202.7% during the second quarter of 2021 compared to the same quarter of the previous year,” Statistics Botswana’s report reads. “The increase was substantial as it is in comparison to the period where there were COVID-19 restrictions that ended in a complete lockdown during the second quarter of 2020. “Another factor contributing to the increase is the planned strategy to align production with strong trading conditions strengthened by rising consumer demand in the key markets following the easing of COVID-19 restrictions. “Similarly, the quarter-on-quarter analysis shows that production registered an increase of 15.6 percent during the second quarter of 2021 compared to the preceding quarter.”
Output at Debswana, the country main diamond producer, reached more than 10.8 million carats in the first half of the year, up 42% compared to the same period last year, with De Beers’ executives saying it was expected that stable prices and demand would continue for the balance of the year. De Beers and government hold equal equity in Debswana.
Statistics Botswana figures show that production of other minerals such as gold, coal and salt were all up in the second quarter, with only soda ash recording a drop.