The Gross Domestic Product (GDP), which is an aggregate measure of the value of goods and services produced within the country, has been negative for three consecutive quarters in 2024, as Botswana’s economic mainstay sectors remained subdued.
Data from Statistics Botswana released recently, showed that the main sectors of economic activity struggled to stay afloat into the third quarter with most of them contracting due to subdued demand and weak economic activity.
“The real Gross Domestic Product decreased by 4.3 percent during the period under review, as opposed to a growth of 1.1 percent in the same quarter of 2023,” the report revealed. “The decline was attributed to real value added by Diamond Traders, Mining and Quarrying, Agriculture, Forestry and Fishing, and Manufacturing, Transport and Storage which decreased by 75.6%, 27.2%, 2.1 percent, 1.7 percent, and 0.8 percent respectively.”
GDP is measured through aggregating consumption, investment, government spending and net exports. Data from Statistics Botswana showed that whilst consumption was positive, net exports remained negative causing negative growth.
Botswana’s exports fell from 2023 when the diamond market began to contract due to competition from synthetic and subdued demand in the US and China markets. The trend has continued throughout 2024 eating away at the value of Botswana’s net exports and erasing the value of the GDP.
Net export data from Statistics Botswana showed that as at October last year, the country’s exports amounted to P50.8 billion, down from P69.8 billion over the corresponding period in 2023. Much of this difference was due to the drop in diamond sales.
This trend resulted in the fall of economic activity to negative 0.5 percent year on year in the second quarter, after a -5.3 percent performance in the first quarter. Three successive quarters of negative economic activity constitute a technical recession, but for Botswana, the impact could be steeper than what most estimates.
Finance minister, Ndaba Gaolathe, has said the projection that the economy contracted by 1.7 percent in 2024 could be worsened by several factors including further disruptions in the diamond market, extreme weather conditions including droughts, floods, cyclones, and persistent defects in the major power plants.
The latest Statistics Botswana figures also show that non-mining GDP increased by 4.4 percent in the third quarter of 2024 compared to a 5.1 percent rise registered in the same quarter of the previous year. Non-mining GDP has been swimming against the decline of mining GDP as sectors such as financial services perform positively.
