Country Report Botswana March 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 national 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 8.9% in 2009 and 6.4% in 2010.
• The current account is forecast to show a deficit of 7% of GDP in 2009 as diamond exports fall by 70%; the deficit will narrow to 2.9% of GDP in 2010 as diamond exports begin to pick up.

Monthly review

• A public opinion poll found that 90% of Batswana approve of Mr Khama's performance as president.
• The BDP leadership is nervous about party unity in the build-up to the general election in October and wants to postpone elections to the party's central committee until after the election.
• The leadership of the Botswana National Front, the main opposition party, has scored a tactical victory against party dissidents.
• Mr Khama has again expressed his doubts about the prospects for success of the power-sharing administration in Zimbabwe.
• The status of the 2009/10 budget is unclear after the government indicated that it was reviewing its spending plans.
• A US-based credit ratings agency has downgraded the outlook for Botswana from negative to unstable as a result of the deteriorating budgetary situation.
• Year-on-year inflation fell to 12.8% in January, and the Bank of Botswana, the central bank, cut the bank rate from 15% to 14% on February 27th.
• Debswana's diamond mines will remain closed until mid-April: two will remain closed for the rest of the year and the others will resume at a reduced production level.
• With the collapse in diamond exports, the trade deficit in the last quarter of 2008 was P4.8bn (US$608m), and foreign-exchange reserves have fallen.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;60;10;20
NAICS Code: 336;52;212;311