Inflation to remain close to the bottom of Botswana’s inflation target band over coming months
Botswana’s economic recovery will stumble in 2017, as base effects following the recession in 2015 are no longer enough to offset persistent headwinds in the mining sector. This is according to the recently updated BMI Africa Country Risk Report for Quarter 4 of 2017.
It is noted that weak revenue growth and a commitment to capital spending will see Botswana’s fiscal deficits continue over a short-term outlook to 2019. “That being said, a relatively small debt burden means any shortfall will remain largely manageable. Under performing growth in Botswana’s mining sector and the poor SACU receipts will see the country’s current account surplus narrow over our short-term outlook, as import growth remains robust in the face of stagnant foreign revenues. However, this contraction in the country’s trade balance will be short-lived, and represents no real threat to the wider economic outlook,” the report reads in part.
It also states that inflation will remain close to the bottom of Botswana’s inflation target band over the coming months, as low fuel and food prices temper the country’s consumer basket. This according to the report, will see the central bank persevere with a loose monetary policy through to 2019.
The report further shows that the Southern African economy will however remain an attractive destination for foreign capital, with foreign inflows into coal mining likely to offer a significant long-term boost to growth.
Meanwhile Botswana will reportedly remain one of the most politically stable countries in Southern Africa over the long-term forecast period to 2026. Although risks exist in the form of climate change and high levels of inequality, the Country Risk Report shows that these are unlikely to pose a substantial threat to the country’s political stability.