Mining propels GDP to 4.1%

Brian Benza
Staff Writer | Monday July 5, 2010 00:00

GDP is a primary health indicator of an economy that shows the total market value of goods and services produced in a country in a year.

'Real Gross Domestic Product increased by 4.1 percent in March 2010, compared to the revised 15.4 percent increase registered during the fourth quarter of 2009,' the statement continues.

'The major contributor to the March 2010 increase was mining, which recorded an increase of 9.1 percent. Output in the first quarter was 36.4 percent higher than the same period the previous year, mainly due to increased production by (the) diamond mines, which were temporarily closed in early 2009.'

Diamond sales, which contribute about 33 percent to the GDP and 75 percent to foreign exchange earnings, have picked up significantly in 2010 while prices, which had softened by about 60 percent during the recession, are now back at pre-recession levels. CSO figures (CSO) also show that the economy's contraction in 2009 was revised to an estimated 3.7 percent from the 6.7 drop earlier seen.

GDP bounced back by a positive 7.2 percent in the fourth quarter of 2009 after shrinking by 20.9 percent, 2.5 percent and 7.9 percent in the first three quarters of the year respectively.

Due to the strong recovery of the diamond market, Government expects a five percent economic growth in 2010/11. However, the International Monetary Fund's World Economic Outlook released in April predicted that Botswana's economy would expand by 6.3 percent this year and by 5.1 percent in 2011/12. Part of this strong recovery, the IMF says, is due to Botswana's policy decision to spend its way through last year's recession, also known as counter-cyclical fiscal policy.

Over time, researchers at the World Bank have raised their forecasts for Botswana's economic performance this year from 4.8 percent to 5.8 percent.

Regarding expenditure, the CSO says real Gross Domestic Expenditure increased by 3.7 percent in the first quarter of 2010, compared with a decrease of 11.7 percent in the fourth quarter of 2009.

'Final consumption expenditure by general government decreased by 7.0 percent while households final consumption expenditure increased by 19.3 percent,' the statement says.

In the case of foreign trade, real exports of goods and services recorded an increase of 81.4 percent while imports declined by 28.7 percent in March 2010.