Botswana Business Forecast Report Q3 2008

Publication Date	May 2008
Publisher	Business Monitor
Product Type	Report
Pages	51
ISBN Number	1748-2372
Product Code	BMI01246

Buy this product or for assistance call +44 20 7060 7474

PDF £250.00$416 | €280

FAX Order above formats by FAX

Summary

Stability Maintained, Strong Economic Growth Continues In April, President Festus Mogae handed office to his deputy, Ian Khama, after voluntarily retiring with over a year left of his term. Few changes in policy direction are expected, but there will be notable differences in the style of governing. Khama, a retired general and former head of Botswana's military, is regarded as an authoritative personality and a leader who surrounds himself with trusted advisors, a number of whom are former military colleagues that have been given key cabinet positions. As vice president Khama was rarely seen in parliament, and he will need to work on his relationships within the ruling Botswana Democratic Party, as well as his image amongst the electorate.

Khama has emerged as amongst the regional presidents most critical of the Mugabe regime in Zimbabwe and its controversial handling of that country's March elections. Indeed, the leader of the Zimbabwean opposition and alleged winner of the presidential ballot, Morgan Tsvangirai, has been allowed to set up base within Botswana. Khama's principled stance has been welcomed by the major world powers and investors, and will serve to reinforce Botswana's democratic credentials.

We forecast real GDP growth of 4.3% this year, rising to an average of above 6% over the rest of our forecast period. Private investment is driving the economy, with a number of FDI projects underway or planned. Diamonds remain the key sector, but there are encouraging signs of economic diversification. According to the authorities, non-mining activities made a larger contribution to economic growth in 2007 than mining. Inflation, however, remains a problem. The impetus is coming almost entirely from higher prices for food and fuel. Inflation could be near its peak, but we predict a year-end rate of 9% in 2008. The central bank has signalled that it is unlikely to change its policy interest rate of 14.5% in the short term.

By regional standards, Botswana is a good place to do business. It is the least corrupt country in Africa, is well governed, open to the global economy and safe for foreigners. By global standards, however, the country presents plenty of challenges. The judiciary is slow and physical infrastructure has still to improve. Perhaps most significantly, skilled labour is difficult to obtain, and with the government employing 40% of the working populace at inflated wages, the wages to productivity ratio is distorted. Extremely high levels of youth unemployment could also create a potentially dangerous social dynamic in the years to come.

Content

Executive Summary
- Stability Maintained, Strong Economic Growth Continues
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- All The President's Men (and Women)
- Former President Festus Mogae Handed The Keys to The State House in Early April to His Deputy, Ian Khama as
- Long Planned. We See Little Risk of Policy Deviation under Khama, but He Is Something of An Unknown Quantity
- Foreign Policy
- Integration Woes
- External Policy Is Largely Focused on Trade Issues, Which Is Complicated by The Myriad of African Integration
- Bodies in Which Botswana Is A Member
List of Tables
- Table: Botswana Political Overview
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Introduction
- Feeling The Pinch
- Economic Activity
- Investment Driving The Train
- We Have Undertaken A Comprehensive Review of Our Forecast Scenario. Real Gdp Growth Looks Set to Dip Slightly
- This Year to 4.3% Due to Exogenous Factors, but The Medium-Term Outlook Is Strongly Bullish on The Back of
- Powerful Investor Interest
List of Tables
- Table: Botswana - Economic Activity
- Fiscal Policy
- Thinking Ahead for Future Generations
- The Budget Balance Should Remain Healthy over Our Forecast Period, but Surpluses Are Likely to Gently Reduce
- over The next Decade, with Our 2008 and 2009 Forecasts Standing at 10.4% and 9.3% of Gdp, Respectively
List of Tables
- Table: Botswana - Fiscal Policy
- Monetary Policy
- Bob to Stay Calm under Pressure
- Inflation Remains Well above The 4-7% Medium-Term Official Target Range, but May Be Close to Peaking. The
- Pressure Is Coming from Imported Prices
List of Tables
- Table: Botswana - Monetary Policy
- Exchange Rate Policy
- Pula: Broadly Steady
- We Forecast That The Botswana Pula Will Depreciate Slightly against The US Dollar in 2008, Yet with The Possibility
- of Some Renewed Strength in 2009 and 2010
List of Tables
- Table: Botswana - Exchange Rate Policy
- Regional Inflation Outlook
- Global Food Inflation: Ssa Implications
- Elevated Global Food Prices Are Likely to Affect Sub-Saharan Africa More Severely than The Wider Developing World
Chapter 3: Special Report
- Business Outlook for Global Frontier Markets
- Growing Fast on The New Frontier
- The 41 States That Bmi Examines in A New Report on Our Online Service May Make up Only A Small Slice of The World
- Economy, but They Possess Characteristics That Will See Them Gain Importance in The Eyes of Investors and Global
- Businesses over The Coming Years,
- Frontier Investment
- Potential and Pitfalls
- The Spectacular Macroeconomic Performance of Frontier Markets in Recent Years Has Been Matched by Mildly
- Successful Efforts to Deepen Capital Markets
List of Tables
- Table: Frontier Markets - Key Data and Projections for Top 10 Countries
- Table: Gdp per Capita, US$ (in Order of % Increase)
- Table: Diversify through Frontier Markets - Correlation Coefficients January 2004-April 2008
- Table: Frontier Market Indices
- Regional Overview
- Laos
- Neighbouring Economies The Key to Growth
- Laos's Gdp Growth Has Been Boosted in Recent Years as Neighbours China, Thailand and Vietnam Compete for
- Its Natural Resources. Gdp Expansion in 2007 Has Been Estimated at 7.6% and We See Annual Growth Remaining
- above 7% for Our Five-Year Forecast Period
- Yemen
- Huge Potential, but Don't Bank on Gcc Membership
- Markets Do Not Come Much More Frontier than Yemen, and, as Would Be Expected, There Is Huge Potential for
- Development, with The Prospect of Eventual Gcc Membership Likely to Act A Key Investment Pull
List of Tables
- Table: Yemen - Economic Activity
- Democratic Republic of The Congo
- Mining Industry to Drive Growth
- The Democratic Republic of The Congo's Mining Industry Will Be A Key Driver of Growth and Is Likely to Attract
- Significant Levels of Fdi, with Our Real Gdp Forecasts Standing at 8.3% and 7.9% in 2008 and 2009, Respectively
List of Tables
- Table: Democratic Republic of The Congo - Economic Activity
- Cuba
- Investment Prospects after Fidel
- The Accession of A New Leadership Structure in Cuba Has Sparked Excitement That The 45-Year-Old Trade Embargo
- with The US May Be Lifted and Cuba May Move toward Market Liberalisation
List of Tables
- Table: Cuba Macroeconomic Data and Forecasts
- Mongolia
- Minerals to Drive Economic Boom
- Mongolia Is in The Midst of A Massive Resource-LED Economic Boom That Should Lift Gdp Growth into The Double
- Digits and Underpin Robust Increases in Exports and Inflows of Foreign Investment Capital over The Long Term
List of Tables
- Table: Mongolia - Economic Activity
Chapter 4: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
List of Tables
- Table: Bmi Business and Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Infrastructure
- Market Orientation
List of Tables
- Table: Middle East & Africa, Annual Fdi Inflows
- Operational Risk
List of Tables
- Table: Bmi Trade Ratings