Country Report Botswana February 2009

Outlook for 2009-10

• 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 October 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 cause a modest expansion in spending, particularly on infrastructure projects.
• The Economist Intelligence Unit forecasts that real GDP will contract by 3% in accounts year 2009/10 (July-June), as demand for diamonds slumps; in 2010/11, as global recovery gets under way, real GDP will grow by 2.3%.
• Lower global food and oil prices are expected to drive down Botswana’s inflation to an average of 8.5% in 2009 and 6.4% in 2010.
• The current account is forecast to show a deficit of 2.9% of GDP in 2009 as diamond exports drop significantly; the deficit will widen to 4.3% of GDP in 2010 as imports continue to grow while exports stagnate.

Monthly review

• A number of BDP councillors have left the party, having failed to be selected as candidates for the local elections in October. Some will stand for the Botswana Congress Party, others will stand as independents.
• Two local by-elections turned out badly for the Botswana National Front, the main opposition party, following months of turmoil in the party.
• Armando Lionjanga, the chief executive of the Public Procurement and Asset Disposal Board, has been found guilty of corruption.
• The government has reluctantly supported the power-sharing deal in Zimbabwe, having argued for a rerun of the country’s presidential election.
• The budget for fiscal year 2009/10 (April-March) projects a deficit of 14% of GDP; although the government expects mineral revenue to fall by up to 50% because of the economic downturn, it is maintaining its spending plans.
• The budget deficit is to be financed by savings that have accumulated over several years of fiscal surplus.
• Real GDP growth in the first nine months of 2008 was 3.3%, despite a 1.6% contraction of mining value added.
• In November diamond exports were down by 73% on the previous year and exports of copper-nickel were down by 48%; similar trends may be expected in 2009 as the full effects of the world economic downturn are felt.

Source: Country Report

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