Firms across all sectors of the economy are optimistic about economic activity in the third quarter of 2021 compared to their pessimism about the previous quarter.
According to the Business Expectations Survey (BES) conducted by the Bank of Botswana, the optimism is evident in anticipated improvement in profitability, sales volumes, imports of goods and services, and investment in plant and machinery. The survey sampled 100 businesses from 13 economic sectors.
These factors, along with expectations of economic growth in the Retail and Accommodation, Transport and Communications, Mining and Quarrying, Manufacturing, Finance and Professional and Administrative Activities sectors, are believed to have contributed to the improved expectations relating to overall business conditions.
“Firms in Manufacturing and Mining and Quarrying were optimistic about economic growth prospects in the third quarter of 2021 compared to the prior quarter,” says the BES report. “This aligns with the less stringent COVID-19 movement restrictions. The Finance and Professional and Administrative Activities sector was also optimistic about economic activity supported by accommodative monetary conditions and government interventions to mitigate the impact of COVID-19, including the implementation of the Economic Recovery and Transformation Plan (ERTP) and the Industry Support Facility, among others.”
Compared to the previous one, the perceived improvement in economic performance in the current survey likely reflects the expected resumption of economic activity following the end of the State of Public Emergency (SOE).
The report says businesses also expect cost pressures to rise in the fourth quarter of 2021 mainly due to the second round effects of the 2 percentage point increase in Value Added Tax (VAT) which was effected in April 2021.
Businesses cited the COVID-19 restrictions implemented to assist with containment of the pandemic as a major hindrance to doing business. Firms that are predominantly in the Retail, Accommodation, and Transport and Communications sectors highlighted COVID-19 restrictions as the greatest challenge to their business operations for the third quarter of 2021.
Unavailability of skilled labour was the second most commonly cited impediment to doing business, especially by firms in the Construction and Real Estate sector, reflecting reported difficulties experienced in recruiting foreign skilled labour while shortage of raw materials was considered an impediment to operations by Manufacturing sector firms.
Weak international and domestic demand was also reported as a challenge to doing business in Botswana whereas effective regulatory framework, favourable political climate, adequate water supply and government spending were viewed as supportive factors to doing business in Botswana for the third quarter of 2021.
Conducted by the Bank of Botswana, the quarterly BES collects information on the domestic business community’s perceptions about the prevailing state of the economy and expectations during the survey period. In completing the survey, businesses respond to questions on, among others, the prevailing business climate, outlook for economic growth and inflation, and business performance in the survey horizon.