StanChart raises country’s growth forecast

Standard Chartered Bank Botswana Economist for Africa Markets, Emmanuel Kwapong projects that increased government spending could add to inflationary pressures during 2024/ 25 financial year.

Addressing the Media recently, Kwapong said the bank raised its growth forecast to 3.9 percent considering softer growth experienced in the second half of last year. Towards the second half of this year, the economy was softening in growth, largely because of the diamond sector and diamond prices which softened significantly in the global market. “That in essence impacted growth but we are starting to see some signs of tailwinds that forecast growth in Botswana in 2024. We have recently raised our 2024 growth forecast by one percentage point to 3.9 percent and that reflects the stimulus presented in the budget.”

He said they were expecting fairly loose fiscal policy to be implemented in Botswana. “In times when the diamond sector is not looking good, the government uses the public sector spending to support growth and this was the case we were in, coming to this year. However, we were surprised by the extent of the stimulus in the national budget package and that has contributed to our growth upgrade.”

Presenting the National Budget recently, Minister of Finance, Peggy Serame said despite the expansionary budget with an overall balance in deficit, Government will strengthen fiscal sustainability measures by maximising domestic revenue collection as well as curb expenditure growth and leakages, while addressing overall spending inefficiencies. She emphasised that the contribution by the private sector as a key driver of economic growth and job creation. “In addition, the role of the informal sector cannot be over- emphasised. It is therefore fitting that a new employment creation and transformational Fund has been proposed for the 2024/ 2025 financial year to support this critical sector.”

Kwapong said the bank anticipates the fiscal deficit for 2024/ 25 to be about 2.3 percent against government’s projection of 2.8 percent. The bank expects higher oil prices which poses risks to inflation. “We do not see the Bank of Botswana cutting interests rates any longer. Initially we had expected a 50 basis points cut before the budget but we think the central bank will remain cautious regarding interest rate cuts.”