Rays of hope despite business confidence slump
Mbongeni Mguni | Friday May 22, 2020 12:39
According to the latest edition of the Bank of Botswana’s Business Expectations Survey, a sample of 100 local businesses revealed that the majority expect sales, profitability, exports of goods and services, investment in vehicles and equipment, investment in buildings, as well as ‘other’ investments to decline in both the first and second quarters of 2020.
Businesses also expect employment to decline. “The expected deterioration in business confidence during the first half of 2020, is consistent with the perceptions of weaker overall economic growth in the first quarter of 2020, and the overall contraction expected in the second quarter,” the central bank stated.
“The perceived generally weaker economic performance in the current survey compared to the previous one could be associated with the disruption of business operations following the outbreak of the COVID-19 pandemic.”
The coronavirus has shuttered the economy, causing key sectors such as mining, tourism and others to haemorrhage income, putting pressure on jobs and government revenues.
However, despite the general gloom, local companies expect the economy to grow in the first quarter, contract in the second and recover in the balance of the year.
The Ministry of Finance and Economic Development expects the economy to contract by 13.1% this year, while the International Monetary Fund has forecast a drop of 5.4 percent. By comparison, firms sampled by the Bank of Botswana expect the economy to grow by three percent this year, which would be equal to the level of growth last year.
The central bank found that domestic market-oriented firms, particularly in trade, hotels, restaurants and transport sectors, were generally optimistic about the long-term economy, into 2021. Export market-oriented firms, such as mining and quarrying were pessimistic about both the short and long term economic outlook and expect stagnation in the 12-month period into next year.