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BOB projects slight inflation increase

The Director of the Research and Financial Stability Department, Dr Tshokologo Kganetsano has indicated this week at the Monetary Policy Committee (MPC) that in the long term there might be slight increases in the inflation rate which will not be felt in the medium term.

Kganetsano noted that the inflation forecast is mostly in the overall performance influenced by the overall performance of economies. This is despite Bank of Botswana (BoB)’s commitment to keep inflation rate under control after realising few months ago through researches that the Botswana banking sector which has historically been characterised by high rates of profitability was experiencing many declines in its outputs and inputs. Although the central bank continues to highlight that they will strive to maintain the inflation rate, BoB anticipates slight changes in future.

Governor of Bank of Botswana Moses Pelaelo has noted that with the whole increased Government expenditure, they still foresee good outlook in future. Pelaelo noted that the outlook for price stability remains positive as inflation is forecast to remain within the Bank’s 3 to 6 percent objective range in the medium term. Inflation was unchanged at 3.3 percent between February and March 2019.

Pelaelo highlighted that BoB continues to project a possible outlook looking at the financial state of the Global state. He further highlighted that a global output growth is expected to ease to 3.3 percent in 2019, from an estimated expansion of 3.6 percent in 2018.  
Moreover he stated that it has been anticipated that the increase in government spending, as well as implementation of initiatives, such as the doing business reforms, should also be supportive of economic activity. Overall, the economy is projected to operate close to, but below full capacity in the short to medium term, thus posing no upside risk to the inflation outlook.

As economies keep experiencing merits and de-merits, according to the Governor, the experienced moderation in global growth was as a result of various country specific factors which include but not limited to trade tensions could flare up again thereby hampering confidence, investment and growth. “These are what drive our economies, he noted. He has further noted that continuing policy uncertainty, possible slower growth in China, the reception given to Brexit, tightening financial conditions, geopolitical risks and high debt levels. Regionally, the South African Reserve Bank revised its forecasts for GDP growth for 2019 downwards to 1.3 percent from 1.7 percent,” he said.

GDP is projected to increase by 4.2 percent in 2019 where as real GDP grew by 4.5 percent in 2018, compared to a lower expansion of 2.9 percent in 2017.  It has been explained by the bank officials that this was mainly attributable to the continued good performance in non-mining sectors and the recovery in mining output. Mining output expanded by 7.4 percent in 2018, compared to a contraction of 11.1 percent in 2017. Non- mining GDP grew by 4.1 percent in 2018, compared to 4.8 percent in 2017.

The significant influences on domestic economic performance include conducive financing conditions as indicated by accommodative monetary policy and sound financial environment that facilitate policy transmission, intermediation and risk mitigation. Subdued domestic demand pressures and the modest increase in foreign prices contribute to the positive inflation outlook in the medium term. This outlook is subject to upside risks emanating from the potential rise in administered prices, in particular, domestic fuel prices and government levies and taxes, beyond current forecasts

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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