Economic growth picks up

Brian Benza | Friday July 18, 2014 11:22

 

Statistics released by Statistics Botswana (SB) this week show that the mining sector drove the higher economic growth figures largely on the back of increased production in diamonds.

“At industry level, most of the increase was attributed to Mining and Trade, Hotels & Restaurants which increased by 10.7 and 7.9 percent respectively. The increase in real value added of the mining sector was due to a 23.6 percent increase in the diamond production. Scheduled plant maintenance at the Orapa mine, which yielded low production, recorded adverse contribution of the mining sector in the first quarter of 2013, whereas in the period under review the contribution was affirmative, because production had normalised,” reads the SB report.

The Anglo American output figures show that Debswana diamond production increased by 27 percent in the first quarter of this year as output at Orapa mine bounced by 54 percent compared to the same period last year.

The 2013 first quarter production of diamonds was impacted by planned plant maintenance at Orapa and the cleanup of the June 2012 sidewall failure in the Jwaneng pit.

Economic experts believe that the mining dominance, like last year, will compensate for the weak activity in the non-mining sector.

“Our initial impressions of the numbers suggest that most of the same economic trends of 2013 have continued into 2014 with mining related exports providing the key driver for growth and compensating for the generally modest to weak performance of some non-mining sectors, particularly from Agriculture, Manufacturing, Construction, and Water & Electricity,” said chief investments officer at Afena Capital Alphonse Ndzinge.

According to SB, all other sectors, but one, recorded positive growths of more than two percent over the period. The exception is the water and electricity sector, which recorded a decrease of 103.9 percent.

In the period, there was a slight improvement, even though still negative, in the value added by the water and electricity sector after a decrease of 200.6 percent realised in the fourth quarter of 2013.

The decline is largely by the electricity sector, which has been contributing negatively to the economy since first quarter of 2012 due to generation challenges at Morupule B power station.

In a statement released this week, the International Monetary Fund (IMF) said that Real GDP growth is expected to moderate to 4.4 percent in 2014 from 4.9 last year, reflecting the slowdown in diamond recovery and continued problems in the electricity and water supply (Table 1). Subsequently, growth is expected to stabilise around four percent in the medium-term, with slightly higher growth in the non-mining sector as the bottlenecks in the energy sector are removed.