With National accounts data for the first three quarters of 2021 showing that GDP was 13.5 percent higher than during the same period in 2020, economists at Econsult argue that this suggests that final real GDP growth for 2021 will surpass the 9.7 percent and 8.7 percent growth forecasts set out by the Ministry of Finance and Economic Development (MFED) and the IMF respectively.
Sethunya Kegakgametse and Kitso Mokhurutshe point out that this indicates stronger than expected economic recovery from COVID-19 for the year 2021 to September. However, they fear that the emergence of the Omicron variant, which was first reported in November 2021, may have dampened growth during the fourth quarter of the year, the extent of which will only be clear once Statistics Botswana publishes GDP data for the full year towards the end of March 2022. “Travel restrictions are bound to have had a disproportionately larger impact on the tourism industry, further delaying the recovery of the sector,” they wrote in a quarterly report released recently.
“The momentum in economic growth has been mainly driven by recovery in the diamond trading and mining sectors, raising questions about the extent to which the broader economy will grow and reap the benefits of this recovery,” they added noting that Diamond Trading and Mining were the best performing sectors in Q3 2021, recording year-on-year growth rates of 80.6 percent and 15.6 percent, respectively.
Non-diamond private sector output (total GDP excluding mining, diamond trading and public administration) was 8.1 percent higher during the nine months to September 2021 than in the same period in 2020, which Kegakgametse and Mokhurutshe argue that it indicates robust, broad-based economic recovery. Only two sectors of the economy, namely Agriculture and Accommodation & Food Services recorded negative growth during Q3 2021. “All in all, as we enter 2022, the key developments in 2021 included broad-based economic growth, a significant increase in government spending and borrowing, and rising inflation rates.”
