The local economy contracted by 7.9% last year, its worst performance on record, as the weight of COVID-19 hit across nearly all sectors.
Figures released by Statistics Botswana earlier today show that while the economy improved in the fourth quarter, registering a contraction of 4.1% from a contraction of six percent in the third quarter, the full year performance reflected analyst projections of unprecedented pressure.
Government had projected a contraction of 7.7% for 2020, while the African Development Bank expected 8.9%. The figures released this morning are however an improvement from the 13.1% contraction Finance Minister, Thapelo Matsheka initially estimated in April 2020 after the onset of COVID-19 in the country.
The ministry later revised this projection to 8.9% in October, before Matsheka settled on 7.7% in his budget speech in February.
World Bank data dating back to 1961 shows that the 2020 Gross Domestic Product (GDP) growth is the lowest on record, falling before the previous record of 7.7% recorded in 2009 when the economy was affected by the global recession. According to the World Bank figures, the country has only experienced three recessions since Independence, being 2009, 2015 and 2020.
Statistics Botswana researchers said the contraction in 2020 was mainly due to the poor performance of sectors such as mining, trade, hotels & restaurants as well as the construction industry. These recorded decreases in real value added of 26.2%, 14.8%, and 11% percent respectively.
“The poor performance of the economy was mainly due to the impact of measures that were put in place to combat the spread of the COVID-19,” the data agency said in a commentary accompanying the GDP figures.
“The decrease of 26.2% in the real value added of the mining industry was mainly due to the reduction in the real value added of diamond, soda ash and coal by 28.8%, 10.1% and 8.7% respectively.
“The negative growth (in trade, hotels & restaurants) was mainly driven by the huge decrease in real value added of hotels and restaurants by 33.3%.”
In the midst of the doom, agriculture performed against the tide, added 2.3% in real value, while general government added by 2.8%. The agriculture sector was helped by strong rains last season, while general government’s growth is associated with the higher expenditure to combat COVID-19.
The 2020 figures also show that trade, hotels & restaurants as well as general government industries remained major contributors to GDP at 18.7% and 17.2%, respectively. They were followed by finance & business services as well as mining at 15.3% and 11.5% respectively.