Country Report Botswana December 2008

Summary

The ruling Botswana Democratic Party (BDP) under the president, Ian Khama, will remain in power over the forecast period and is expected to win the 2009 legislative election, continuing its decades-long period in office.
The government will continue to pursue largely prudent policies in 2009-10, although countercyclical fiscal policy will see a modest expansion in spending, which includes a strong emphasis on infrastructure development.
The Economist Intelligence Unit forecasts that real GDP growth will drop to 0.5% in national accounts year 2009/10 (July-June), as demand for diamonds slumps; with global recovery under way, growth will rise to 2.5% in 2010/11.
Lower international food and oil prices are expected to drive Botswana's inflation down to an average of 8% in 2009 and 6.7% in 2010.
The current account is forecast to swing into a deficit of 0.8% of GDP in 2009 as diamond exports drop significantly. The deficit will widen to 1.3% of GDP in 2010 as import growth outpaces the modest recovery in exports.

The president, Mr Khama, has used his first annual State of the Nation address to emphasise that he fully supports democracy, but that discipline is needed to prevent its erosion by combating anti-social behaviour.
The fortunes of the main opposition party, the Botswana National Front, have declined further as more dissidents leave or are expelled. The popularity of the party leader, Otsweletse Moupo, is at an all-time low.
The foreign affairs minister, Phandu Skelemani, has called for drastic action against Robert Mugabe's regime in Zimbabwe, such as closing Botswana's borders with its neighbour, and has offered to host its main opposition party.
Year-on-year inflation fell in October for the second successive month, to 13.1%, from 14% in September, on account of lower domestic fuel prices.
Botswana's foreign-exchange reserves have fallen from US$9.8bn in December 2007 to US$9.1bn in October 2008, owing to losses on the global financial markets where they are invested.
Prices for Botswana's main export, diamonds, have fallen considerably since September; in response, the diamond industry's two largest producers, DeBeers and Alrosa, have announced that they will cut diamond sales.
Falling commodity prices have also hit copper and nickel producers in Botswana, but there have been indications that various uranium, gold and coal-mining projects will go ahead.

Source: Country Report

This report covers the following industry codes:
SIC Code: 1;10
NAICS Code: 11;212