S&P forecasts 4.2% growth on higher gov't spending

Leading credit ratings agency, Standard & Poor’s expects Botswana to experience solid growth in the current financial year, with higher government spending helping the economy expand by at least 4.2 percent.

S&P’s forecast is in line with government and the Bank of Botswana’s own projections for economic growth this year. The International Monetary Fund expects 3.9 percent while the African Development Bank last week projected 3.8 percent. In an update released on Friday, S&P said stronger government spending would anchor the country’s economic performance this year. Government plans to spend P64 billion in 2019-2020 up from P61.7 billion in the last financial year, running a P7.3 billion budget deficit.

“An expansionary fiscal stance ahead of the general elections in October 2019 should support this growth,” S&P analysts said. “We expect strong domestic demand this year, we also expect diamond output will increase at a moderate rate.” The analysts added: “The country’s most important economic sector is likely to benefit from resilient global demand, but price trends and demand for diamonds are highly susceptible to external factors, for example demand in the US or China as key markets.”

Editor's Comment
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