Manufacturing down 2% in Q4 of 2012

Please select a featured image for your post

The manufacturing sector saw a steadying decline in the fourth quarter (Q4) of last year. According to Statistics Botswana’s gross domestic product (GDP) data released last week, manufacturing saw a negative 1.8 percent growth in the last quarter of 2012. This contrasts the futures of the previous year with year- on-year comparison showing that in 2011 the sector had added a significant 10.1 percent to the national economic activity.


The sector has been besieged by market forces and declining global competitiveness. Reports in the close of Q4 stated that the textile industry, which makes up a significant portion of the manufacturing sector, was seeking a P38 million bailout stimulus funding from the Government. This comes after a similar package had been provided off the breath of the 2009 recession to save the industry from total collapse. The industry has suffered, amongst other things, lack of competitiveness with other textile nations across the world competing for the export markets.


As the manufacturing sector is one of the contributors to the country’s exports, it added to the decline of the latter. The fourth quarter was tough for the export markets, characterised by reductions in BMC exports coupled with unstable diamond market price contributing, hence the noticeable decline. Real exports dropped by 7.0 percent in 2012, compared to an increase of 27.5 percent in 2011, while imports in 2012 rose by 8.2 percent as opposed to an increase of 19.2 percent the previous year. According to the statement, real gross domestic expenditure rose at an annual rate of 2.3 percent in 2012, compared with an increase of 8.2 percent in 2011. Statistics Botswana said the slump can be attributed to a deceleration in household final consumption expenditure, which dropped to 1.1 percent in 2012. The extended borrowing, which was reflected on some of the leading banks mid and end of year results in mid 2012, has left households under pressure on spending. Some analysts expect the downward trend to continue, as there has not been any relief for Government employees in terms of a salary increment.


The rest of the economy had mixed futures while the general trend was of a slowdown in growth. Mining continues to struggle since 2009 with its growth slowing by 19.6 percent, compared to 24.7 in 2011. The global commodity markets continue to experience uneven growth with the collapse of some European economies and the slowdown in China’s economic growth while the United States, which consumes most of Botswana’s diamonds, is grappling with its own debt issues thus stifling sustainable growth. In total the economic growth recorded stood at 3.2 percent, a significant slow down on year-on-year basis as 2011 was 7.6 percent in Q4. This growth comes just around the projected economic cool off of 3.7 percent expected this year.