As a firm specializing in market research and data analysis through surveys, feasibility studies, polls, among others, we hope to bring valuable insights through today’s article as we focus on trade surpluses being experienced by the economy following the economic doldrums induced by the Covid19 pandemic.
Statistics Botswana recently published a report with the aim to provide an updated summary of trade statistics on Botswana’s total imports and exports of goods.
In August 2022 imports were valued at P6,926.3 million, a decrease of 15.8 percent (P1,297.3 million) from the revised July 2022 figure of P8,223.6 million. The decline was mainly due to a decrease in Diamonds imports, by 44.7 percent (P676.1 million). In August 2022, Botswana’s total export value went up by 7.1 percent (P711.9 million), from the revised July 2022 figure of P10,046.5 million to P10,758.4 million. The increase is attributed largely to the rise in Diamonds exports, by 8.3 percent (P728.9 million) from the revised July 2022 value of P8,819.4 million to P9,548.4 million.
Botswana recorded a trade surplus of P3,832.1 million in August 2022, which follows the revised trade surplus of P1,822.9 million for July 2022. This is the fourth consecutive surplus and the highest since the beginning of the year. However, this also reveals that the country’s trade balance continues to be largely linked to the global demand for diamonds. Any slight sneeze in the global market for diamonds will leave the local economy with flu.
Why is this key?
Bullish sentiments in the economy means that investors have more confidence in the economy and are willing to pump more money into the nation. In economics, an investor is described as a shy bird willing to fly away from a bad environment characterized by untamed inflation, inconsistent policies, and poor enforcement of the rule of law which safeguards private property from expropriation. Thus, a trade surplus is a tell-tale sign that investors have positive sentiments about the economy.
Furthermore, trade surpluses are healthy for the economy as these indicate the real value of the Pula against other trading currencies. If our currency is overvalued, then imports become cheaper and exports become dearer. In short with an over-valued currency the nation will receive more imports from abroad and with an undervalued currency, our goods and services are optimally priced that other nations are enticed to import more from Botswana. Therefore, from an economic point of view, these consecutive trade surpluses show us that the Pula is trading at a discount against other currencies judging from the trade surpluses the country is experiencing.
Whilst we are experiencing trade surpluses, these surpluses are pregnant with meanings and policymakers should decipher each and every aspect so that the nation is protected from any adverse effects. Furthermore, our surpluses must be characterized by beneficiated exports so that we derive maximum value from them.
It’s all about research
Needless to mention that all the data analysed above is gathered from research activities by Statistics Botswana. There is no sector in the economy which does not require data collection in one way or the other. As a market research firm, our mission is to make the data make sense for your business decision-making. We hope that this article was insightful and that it demonstrated to some extent the importance of market research or data in business decision-making. As stated above, we offer market research and data analysis through surveys, feasibility studies, polls, among other data-related services.
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