Botswana officially enters recession

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Gaborone - Botswana’s economy has officially entered recession after posting two consecutive quarters of negative GDP growth.

In the first quarter of 2020, Botswana’s economy contracted by 0,8 percent. Figures from Statistics Botswana indicate that real GDP for April to June decreased by 24 percent.

The deep contraction in the second quarter was attributed to the huge decline in real value added by mining, quarrying and trade; and hotels and restaurants by 60,2 percent and 40,3 percent respectively.

A steep reduction in the domestic economy was observed across all sectors except government, agriculture, and water and electricity. 

“The poor performance of the economy was mainly due to the impact of measures that were put in place to combat the spread of the COVID-19 pandemic,” Statistics Botswana says in its latest report. 

According to Statistics Botswana, the slump in mining was largely attributable to low performance of diamonds and coal. Diamond production in carats went down by 67 percent, while coal output in tonnes decreased by 40,7 percent.

Diamonds are largely luxury goods thus did not fare well in a global economy hit hard by COVID-19. 

“There is a significant drop in the demand for diamonds in the global markets. With regard to coal, the remedial works on Morupule B Power Plant had a negative impact on its uptake and consequently the decline in production,” the report says. 

The manufacturing industry recorded a decline of 31,3 percent in real value added during the second quarter of 2020, compared to growth of 3,5 percent in the corresponding quarter of 2019.

This has been attributed to contraction in the manufacturing sub-sectors of beverages and diamonds processing. The production of beverages slumped as restrictions were placed on alcohol sales and restaurant operations.

The construction industry recorded a decline of 36 percent compared to three percent growth in the corresponding quarter in 2019. Construction, civil engineering and related activities were all largely frozen by the new coronavirus outbreak.

Transport and communications also fell, dropping 16,9 percent in terms of value added in the second quarter of 2020, compared to 5,4 percent growth in that quarter last year.

Botswana’s government has instigated robust fiscal policy responses to positively influence macroeconomic conditions, including aggregate demand of goods and services, employment, inflation and general economic growth.

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