What a recession means for you

Economists describe a recession as a temporary period of reduced economic activity, when most indicators of economic well-being are weaker. In his budget speech in February 2010, after the global recession hit in 2009, former Finance Minister, Kenneth Matambo described broadly what happens during such periods:

“Botswana experienced an unprecedented loss of national income. Global demand plunged, particularly for luxury goods such as diamonds, and so did government revenue that we use to finance development initiatives,” he said.

His remarks were focused on the picture at national level. For individuals however, the picture is different. In a recession, you can expect the following five things:

- Employment opportunities will decline and those already employed could find themselves either out of their jobs or facing other forms of cost-cutting by firms

- Unemployment rises, not only from those in the formal sector getting retrenched, but also the self-employed and informal sector coming under pressure from the reduced economic activity

- Social safety nets are tightened as government cuts back on its spending to try and avoid steep deficits that often require expensive debt

- Cut backs in government spending also mean a cessation of key projects, policies and programmes, affecting the lives of ordinary citizens

- Banks and the financial sector tighten their credit risk protocols, impacting on businesses and households, which worsens the state of the private sector and the household sector

In recent years, Botswana has faced a recession in 2009, 2015 and 2020. Government, the private sector and ordinary citizens are hoping to dodge a bullet in 2023.