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BMI: Trade deficit to widen, hamper growth

Botswana will see a gradual recovery in real GDP growth over the next five years, supported by private consumption and fixed investment, a BMI research has revealed. However, a combination of sluggish mining sector exports and rising capital goods imports will widen the trade deficit, tempering the extent of the growth.

According to the report low diamond prices will sustain pressure on Botswana's external accounts over the next year, as export revenues and inward investment remain sluggish. However, a relatively strong reserve position and an investor friendly business environment will ensure these dynamics do not become a lasting drag on the overall health of the economy.

A benign outlook for inflation and a change to the BMI monetary policy forecast for South Africa have led BMI to adjust its forecast for the key policy rate in Botswana downwards. With inflation stable but credit growth and confidence surveys low, the Bank of Botswana will focus on supporting economic growth, reads the BMI report.

“Botswana's budget deficit will widen to the largest in six years as the government seeks to implement fiscal stimulus. We forecast a smaller deficit than the government as project realisation will be low. The ruling Botswana Democratic Party will continue to dominate policymaking in the coming quarters, aided by forthcoming changes to the composition of the legislature, and underpinning our view for policy continuity in the coming quarters. That said, these changes will not be sufficient to head off fragmentation within the ruling party during the 2018 handover of power from the current president to an interim successor,” says the report.

The Botswanan pula will resume its depreciatory course before year-end 2016, in line with our view for the South African rand bouncing off resistance. Weak fundamentals in the pula's currency basket countries will see this trend continue through 2017, entailing some modest depreciation.

Key Risks:

  • Ongoing revisions to Botswana's national accounts estimates will affect growth. Amid ongoing efforts by Statistics Botswana to more accurately portray the size and structure of the economy, GDP estimates remain subject to frequent and often notable adjustments.

  • Given Botswana's dependence on imported energy and food, any unexpected rise in global food or oil prices beyond our forecasts will affect the country's growth levels.

  • Uncertain energy supplies pose a persistent risk to economic activity in Botswana. This is exacerbated by the current drought affecting the region.

Africa Country Risk team here at BMI Research to send you over the complete list of 36 NEW Africa Country Risk Reports, just updated for Q3/4 2016. The team believe that they'll be crucial in helping you plan for the economic, political and financial changes that are going to shape Africa in the second half of 2016 and beyond:

The reports contain BMI Research's very latest 100% independent forecasts and analysis that will allow you to immediately assess your risk exposure, evaluate the pace and stability of each country and understand how business environment changes will impact you directly. You'll be able to make confident decisions on the way forward in each of your key markets by utilising the systematic coverage and intelligence delivered by the reports:


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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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