Non-mining leads marginal GDP recovery

Slow down: Mining’s Q1 performance was dampened by lower gold and diamond production PIC: DEBSWANA.COM
Slow down: Mining’s Q1 performance was dampened by lower gold and diamond production PIC: DEBSWANA.COM

The economy’s trajectory turned positive for the first time in nine months, recording a marginal 0.7 percent growth for the first quarter of 2021 led by the non-mining sector. Statistics Botswana figures released last week indicate that real Gross Domestic Product (GDP), a measure of economic activity, recorded a positive turn in the first quarter, after rolling contractions dating back to the second quarter of 2020.

Analysts said the first-quarter growth, while positive, was far below the required recovery to restore the economy to its pre-pandemic path after it contracted by 7.9 percent last year.

Statistics Botswana figures show that the marginal recovery in the first quarter was led by growth in sectors such as diamond trading, water and electricity, wholesale and retail, finance and insurance as well as professional, scientific and technical services.

The growth of 0.7 percent compares to negative 4.6 percent in the fourth quarter of 2020 and 1.2 percent growth in the first quarter of 2020, the period corresponding to the latest results.

“The improvement in the first quarter 2021 GDP, reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to the COVID-19 pandemic,” Statistician General, Burton Mguni said in a commentary accompanying the GDP figures. “During the quarter under review, public administration and defence became the major contributor to GDP by 18.4%, followed by wholesale and retail by 11.4%.”

The non-mining GDP increased by 4.1 percent in the first quarter of 2021 compared to a four percent increase registered in the same quarter of the previous year.

Sectors that witnessed contraction during the first quarter include accommodation and food services (-32%), mining and quarrying (-11%) as well as agriculture, forestry and fishing (minus two percent).

Statistics Botswana researchers stated the decline in accommodation and food services real value added is largely attributed to a decrease of 42.1% in real value added of the accommodation activities subindustry. “The suspension of air travel occasioned by COVID-19 containment measures impacted on the number of tourists entering the borders of the country and hence affecting the output of hotels and restaurants industry. “COVID-19 restriction measures resulted in reduced demand for leisure and conferencing activities, as conferences are largely held through virtual platforms.”

The drop in mining and quarrying, meanwhile, was attributed to lower production of gold and diamonds during the first quarter.

“The poor performance of the diamond sub-industry is attributed to the reduction in production due to a lower grade feed to the plant at Orapa in response to heavy rainfall and operational issues, including continued power supply disruptions. “With regard to gold, the reduction is due to diminishing resource base which affect production,” researchers stated.

While generally, the economy has been reopened to most activities after the pandemic lockdowns, a curfew still persists nationwide while cross-border travel is still based on the production of valid PCR tests. The alcohol industry is also reeling from a sales ban instituted on June 28, while nightclubs have not operated in the country since March 2020.

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