Absa predicts bleak 2024 for Botswana’s economy

Botswana’s economic forecast for this year has been revised downwards further dampened by uncertainties in the broader global economy. Economists at Absa have expressed their fret over what they predict to be a tough year for Botswana marred by an array of downturns.

Absa Southern African economist, Ridle Marcus, last week revealed that inside forecast point to a tough year for Botswana’s economy with the main pressures coming from inflation facing commodities and a steep diamond price crunch.

“The World Bank this year revised forecasts for economic growth from three percent to 2.4 percent for this year and this forecast cut signalled lack of confidence in Botswana’s ability to withstand forecasted pressures especially in the commodities market and diamond price uncertainties,” he told the bank’s economic forum on Thursday.

The economist further said Botswana’s main revenue sources were facing stiff challenges, a situation that heightens fears on the performance of the economy throughout the year.

“We forecast revenues from SACU to continue on a downward trend, and when you add this with difficulties in the diamond market, it’s surely going to be a tough year for Botswana,” he said.

“SACU revenues will not only affect Botswana but will affect the general health of the economy throughout the region.”

SACU’s (Southern African Customs Union) annual report issued last year revealed that the oldest customs union has been faced with revenue declines for the past three years. Custom partners like Botswana have in the past complained about the skewed nature of revenue flows bemoaning the way South Africa dominates revenue flows and benefits more than other members under the current revenue share structure.

“SACU receipts declined from R23.7 billion in 2020/21 to R18.7 billion in 2021/22 and would decline by a further P405 million in 2022/23 owing to declining customs and excise revenues from the adjustment of SACU receipts following the previous overpayments,” the report revealed.

Local fiscal and monetary policymakers will this year be eagerly eyeing a potential rebound in global demand for diamonds, following the steep downturn last year.

According to the Bank of Botswana data, local diamond exports plummeted to a meagre P141 million in November, compared to P3.1 billion in October.

Rough diamonds prices and revenues for producers fell by double digits last year, largely due to high inventory levels of polished diamonds in the midstream, that section of the diamond pipeline occupied by cutters and polishers, who buy from mines and sell to jewellers.

However, the Absa economists have noted a possibility of a rebound for the economy and possibly stronger growth from the economy only if the non-mining sector comes to party and continues on its path to growth.