The lingering adverse effects of the COVID-19 pandemic containment measures pose uncertainty and challenges given Botswana’s high vulnerability to external shocks, said the country’s central bank governor Monday.
Botswana is highly vulnerable to external shocks notably on diamond prices and demand, tourism and delays in the importation of supplies, Governor of the Bank of Botswana (BoB) Moses Pelalelo told a press conference Monday after a Monetary Policy Committee meeting.
Projections by the southern African country’s Ministry of Finance and Economic Development and the International Monetary Fund (IMF) suggest a rebound in economic growth for Botswana this year.
Botswana’s finance ministry projected a growth rate of 8.8 percent in 2021 compared to an earlier estimated growth rate of 7.7 percent before moderating to a growth rate of 5.5 percent in 2022.
On the other hand, the IMF forecasts Botswana’s domestic economy to grow by 8.3 percent in 2021 compared to an earlier projection of 8.7 percent in the January 2021 World Economic Outlook update, and this is expected to moderate to a growth rate of 6.4 percent in 2022.
The disparity is forecasts attest to the challenges of making forward projections when there is uncertainty about the duration of constrained economic activity, the resultant adverse impact on productive capacity as well as the speed of resumption of production and pace of recovery in demand, he said.
Pelalelo said, however, the economy is projected to have performed better is the first quarter of 2021 compared to the fourth quarter of 2020 given the gradual easing of COVID-19 movement restrictions and vaccine rollouts in the first quarter.
Meanwhile, BoB decided to maintain the bank rate at 3.75 percent after inflation increased significantly from 2.4 percent in February to 3.2 percent in March 2021, reverting to within the bank’s medium-term objective range of 3-6 percent. Enditem