In-Depth Analysis
Botswana
Botswana has an excellent track record of political and macroeconomic stability as well as a sound regulatory environment. The economy has a heavy reliance on the diamond and tourism industries, which were adversely affected by the Covid-19 pandemic. The country has some potential to expand its coal mining, energy, and transport industries.
With economic growth already moderating in recent quarters, we expect a sharp deterioration in Q2 2020 and for the economy to contract by 10.2% this year amid tough conditions. These headwinds are due to the combined impact of containment measures to slow the spread of Covid-19, the collapse in global demand, lower commodity prices, a deterioration in tourism earnings, and disruptions to supply chains for the landlocked nation. Botswana’s fiscal policy has historically proven to be a boon to its overall sovereign debt rating. However, against the backdrop of Botswana already posting a series of budget deficits in the past few years, the Covid-19 pandemic is expected to throttle government finances further during 2020, with mineral revenues expected to fall sharply, Sacu transfers declining, and Botswana’s overall tax collection underperforming as the economy contracts. The political environment has been calm over the past quarter, with nothing to indicate an increase in risk. We expect that levels of trust in the government will remain unchanged, despite recent talks about corruption. (Source: Botswana Quarterly Update, published August 2020.)
Macroeconomic Data
(2019)
|
Fiscal Balance (as a % of GDP) |
-6.0 |
|
Consumer Price Index (% change y-o-y, avg) |
2.8 |
|
Current Account Balance (as a % of GDP) |
-7.6 |
|
Real GDP (annual % change) |
3.0 |
|
GDP per Capita, US$ |
7,964.5 |
|
Import Cover (months) |
6.3 |
|
Population, million |
2.3 |
| Total External Debt (as a % of GDP) |
2.0 |