World Bank tips Botswana of looming economic downturn

Arecent study published by the World Bank on Botswana Economic prospects has warned that the domestic economy will continue to slow down given macroeconomic uncertainties and instabilities.

The report, which was launched last week in Gaborone, revealed that economic woes facing Botswana are set to worsen as global uncertainties heighten.

It added that on top of uncertainties in the global economic outlook, local inconsistencies in policy and decision making will bite off remaining hopes of the economy rebounding beyond plummeted economic levels.

Speaking during the launch of the report, World Bank lead economist, Jacques Morisset said prospects for the country are weakening due to problems in both the macroeconomic and local economic outlook.

“Botswana has in the past marked itself as an economic success story, but that growth has plateaued and going forward it will be difficult to maintain the same growth levels unless there are some major reformations undertaken by the government to propel more economic growth,” he said.

Morriset further said that GDP growth figures have been on a downward trend and in progressive quarters it will keep getting worse. For the World Bank, projected growth figures will keep being revised downwards due to the worsening dependence on minerals, which are far from recovery. “The economy of Botswana is vulnerable to vast external shocks especially due to the heightened risk of depending on minerals, which internationally are on a global downturn. The volatility in the market will continue to harm prospects of growth and things will get worse,” he added.

Currently, the Botswana economy has been embroiled in recessionary fears with the country’s principal export, diamonds, facing global price downturns due to a subdued diamond market.

The value of diamonds sold by Debswana in the first nine months of the year slowed to P37.1 billion, from P43.2 billion over the same period last year, as lower demand and pricing in the global market hit the precious stones.

De Beers’ latest sale of rough diamonds, held in Gaborone, netted a provisional $80 million, the lowest amount since April 2020 when demand and prices crashed due to COVID-19. De Beers sells 90% of its production by value to an exclusive list of contract buyers known as sight holders, who are offered stones at 10 sales events or ‘sights’ held in Gaborone each year.