- Growth surpasses the 3.8% Sub Saharan Africa 2024 average
The World Bank’s latest Global Economic Prospects (GEP) report predicts a 4.1 percent growth for Botswana’s economy in 2024, slightly below the government’s projection of 4.4 percent.
However the forecast is higher than the banks’ 3.8 percent growth forecast in 2023.
The projections indicate that Botswana’s economy will surpass the overall 3.8 percent growth expected for Sub-Saharan Africa (SSA) in 2024. Additionally, the economy is anticipated to strengthen further to 4.4 percent in 2025 as inflationary pressures diminish and financial conditions improve.
The projections for regional growth in 2024 and 2025 are little changed from June forecasts, but these aggregates mask a mix of upgrades and downgrades at the country level.
The report highlighted that growth in Sub Sahara Africa (SSA) resource rich countries is expected to pick up in 2024 and 2025 respectively. Botswana is one of key minerals (diamonds) mining economy in SSA.
“Industrial commodity exporters in the region, excluding the three largest economies, are forecast to grow by 3.8 percent in 2024 and 4.1 percent in 2025, up from 2.0 percent in 2023.
This uptick is due to the diminishing impact of the sharp fall in commodity prices from their 2022 peak.
“Growth in the non-mining sectors, especially services, is expected to pick up as inflation gradually declines (Botswana, Cameroon, Democratic Republic of Congo).”
Amidst the World Bank’s positive outlook, local economists say that growth will be fueled by the anticipated strong government spending driven by the election campaigns this year.
The upcoming October 2024 local government and national elections are expected to spur economic growth, driven by an anticipated increase in government spending. Economic growth is set to be a focal point, potentially leading to job creation.
“The elections are coming at a time when the transitional National Development Plan (NDP) 12 is expected to be fully implemented. The upcoming national budget speech reveal estimated funds for the plan,” said an independent economist Lame Bothata.
“Projects such as infrastructure development for roads, schools and health facilities are lined up in different parts of the country. This will result in an improved economic activity bolstered by strong government procurement. Jobs creation will be also improved in short to medium term,” he remarked.
Meanwhile, the GEP report observed that growth in rich mineral resource-based economy such as Botswana weakened in 2023.
“Growth in Botswana softened owing to declines in the global demand and prices for diamonds, while growth in Namibia, a mineral and metal resource-rich country, slowed owing to the loss of momentum in mining output growth and tighter monetary policy weighing on domestic demand,” the report stressed.
Furthermore, the report noted that In Niger, also a metal exporter, growth slowed sharply following a coup in late July, which was followed by international economic and financial sanctions against the junta.
“More broadly, lower metal prices weighed on growth in many metal-exporting economies (Botswana, Democratic Republic of Congo, Liberia, Sierra Leone, Zambia).”