Firms Are Optimistic About Economic Recovery – BoB

The Business Expectations Survey samples 100 businesses from 13 economic sectors


Firms in all sectors in Botswana except Agriculture and Construction and Real Estate are optimistic about economic recovery in the year to March 2023, a report released by the Bank of Botswana (BoB) has revealed.

The Quarterly Business Expectations Survey (March 2022) is conducted by BoB and collects information on the domestic business community’s perceptions about the prevailing state of the economy as expectations during the survey period.

According to the latest BES report, in completing the survey, businesses responded to questions on the prevailing business climate, outlook for economic growth and inflation, and business performance, among others.

The survey coverage comprises the quarter in which the survey is conducted, also referred to as the current period, the subsequent quarter, and the next 12 months. The BES samples 100 businesses from 13 economic sectors, namely Agriculture, Forestry and Fishing, Mining and Quarrying, Manufacturing, Water and Electricity, Construction, Wholesale and Retail, Transport and Storage, Accommodation and Food Services, Information and Communications Technology, Finance, Insurance and Pension Funding, as well as Real Estate Activities.

The report shows that firms are optimistic about economic recovery. “However, the perceived improvement in economic performance in the current survey is less than that in the previous survey,” it says. “The reduced level of optimism in the current survey is reflected by the anticipated deceleration in production, inventories, sales, profitability, and imports of goods and services, mainly due to the increase in cost pressures arising from the geopolitical crisis in Eastern Europe and second round effects of the COVID-19 pandemic.”

The report shows economic recovery optimism among domestic market-oriented firms improving markedly in the second quarter of 2022 compared to the first quarter. “The level of optimism improves further in the 12-month period to March 2023 (M12), consistent with the anticipated continued domestic economic recovery and accommodative monetary conditions, going forward,” it notes.

“Confidence in the domestic market-oriented firms is mainly driven by firms in the Manufacturing, Finance and Professional and Administrative Activities, and Retail and Accommodation and Transport and Communications sectors.”

According to the report, export-oriented firms are even more optimistic about business conditions in the second quarter of 2022 compared to the first quarter of 2022. Their positive outlook on business conditions declines in the 12-month period to March 2023 but remains higher than in the first quarter of 2022.

The BoB report shows that firms expect borrowing costs to increase in all markets in the year to March 2023. “Regarding borrowing volumes, firms expect to increase their stock of loans across all markets in the 12-month period to March 2023 in order to finance increased operations as the economy continues to recover,” it says

Firms expect cost pressures to continue rising in the first quarter of 2022, mainly attributable to the increase in input costs due to fuel price increases effected in December 2021 and reflected in the January 2022 inflation.