Gaborone CBD

Trade, Hotels and Restaurants to drive economic growth this year

Growth in economic activity in 2019 is expected to be pushed up by the trade, hotels and restaurants sector, with mining also anticipated to pick up.

As predicted last year, the sector is expected to continue with its upward trend and register a growth of 7.0 percent.

The latest Business Expectation Survey (BES) also indicates that business conditions are perceived to have improved in 2018 and are expected to improve further in the first half of the new year.

The mining sector, which for the past few years has been under strain, is predicted to register a 3.0 percent increase, compared with the relatively low 1.1 percent growth experienced last year.

While other mineral resources are still struggling, diamond mining is projected to carry the mining sector.

This comes on the backdrop of positive prospects for global demand for diamonds, which are said to likely lead to an increase in sales and prices.

Meanwhile the BES, carried out by the Bank of Botswana (BoB) twice a year, estimates that cost pressures are likely to increase in 2019 owing to the expected increase in wages.

However, inflation is expected to remain between the central bank’s objective range of 3 – 6 percent in the medium term.

Furthermore, the survey makes an observation that domestic lending rates are likely to decline, consistent with rise in domestic borrowing in 2019.

On the other hand, lending rates in neighbouring South Africa are anticipated to rise. Thus it is expected that borrowing from South Africa by local firms will fall this year, while lending rates elsewhere are projected to go up alongside borrowing volumes.

Overall, the local economy is projected to register a growth of 4.5 percent this year and even though economists have consistently labeled the figure ‘overambitious’, the growth, it is believed, will come from contentious rebound in the global diamond market.

Other factors expected to play a part in the growth are government’s supportive fiscal policy, stability in the supply and reliability of power and water supplies as well as reforms to improve business conditions.