Botswana Economic Outlook
After a solid annual 5.4% GDP expansion in the first quarter, the economy likely performed well in Q2. Lower average inflation should have supported household consumption, while a robust acceleration of credit growth in the quarter likely supported domestic demand. On the other hand, weak demand for diamonds—by far the country’s largest export—due to the growing popularity of lab-produced alternatives—should have capped the growth contribution of the external sector. In other news, at the beginning of September, South Africa announced a private-public partnership to upgrade its main border crossings with some neighboring countries, including Botswana. The project, if completed, will ease trade bottlenecks between the two countries, boding well for Botswana’s external sector in the coming years.
Botswana Inflation
Inflation was 1.2% in August (July: 1.5%), staying below the Central Bank’s 3.0–6.0% target range for the second consecutive month. Inflation should average below 2022’s levels in 2023 due to reduced international commodity prices and the lagged effects of rate hikes. Price swings for food, oil and fertilizers are risks to the outlook.
This chart displays Economic Growth (GDP, annual variation in %) for Botswana from 2013 to 2022.