The Central Bank has announced that relative stability in water and electricity supply are expected to support the expansion of economic activity in the non-mining sectors.
This was revealed by Bank of Botswana Governor, Moses Pelaelo at the recent Monetary Policy Committee (MPC) media briefing held at the bank’s head office in Gaborone.
Pelaelo also said the country’s Gross Domestic Product (GDP) is projected to expand in the short to medium term, a situation influenced by the stability in water and electrical supply and the projected accommodative monetary conditions in the domestic economy and expansion in government expenditure.
He also highlighted that real GDP grew by 3.3 percent in the twelve months to March 2018, compared to 4 percent in the year to March 2017, stating that the slower growth reflects a lower increase of 3.8 percent in non-mining activity, compared to 6 percent in the corresponding period in 2017.
“GDP is projected to expand in the short to medium term, driven largely by growth in the services sectors and recovery in mining activity, in line with the positive global economic prospects,” he stated.
The Governor also announced that the MPC decided to maintain the Bank Rate at 5 percent and also that the outlook for price stability remains positive as inflation is forecast to be within the 3 – 6 percent objective range in the medium term.
“Inflation was unchanged at 3.1 percent between June and July 2018,” he announced.
Despite the projected good fortune, the Governor, however, announced that subdued domestic demand pressures and the modest increase in foreign prices contribute to the positive inflation outlook in the medium term.
An outlook, he revealed, is subject to upside risks emanating from the potential rise in administered prices, commodity prices and government levies and/or taxes beyond current forecasts.
In closing the update session, the Governor said the bank will launch the first Monetary Policy Report at the National Business Conference slated for Francistown on September 9th, 2018.
The report is aimed at improving the MPC’s communication. Going forward, the Report will, in addition to the February Monetary Policy Statement, be published in April, August and October every year to provide detailed background information on monetary policy formulation and decisions.