2012-11-14 22:18:56 - Botswana Business Forecast Report Q4 2012 - a new country guide report on companiesandmarkets.com
We are forecasting real GDP growth in Botswana of 4.2% in 2012 and 5.4% in 2013. Growth will continue to be underpinned by diamond exports as well as robust investment in the country´s burgeoning mining sector and in related infrastructure projects. Our outlook for 2012 is tempered given the impact of a weakening external diamond demand.
While diamond output will remain the mainstay of Botswana´s mining production over the coming years, the development of key mining projects in the nascent copper, uranium and coal sub-sectors will bolster growth and set the stage for substantial inflows of foreign capital. Botswana´s political risk profile continues to compare favourably with its African peers, particularly on issues of governance. However, persistently high unemployment and recent
unrest highlight the deep socioeconomic challenges facing the government.
Major Forecast Changes
Based on new, upwardly revised balance of payments data, we are now forecasting Botswana to post a current account surplus of 3.0% of GDP in 2012 and 3.8% in 2013 (we had previously projected a deficit of 1.5% and a marginal surplus of 0.5% in 2012 and 2013 respectively). However, our broad outlook for the country´s balance of payments dynamics over the medium term remains the same, with improving terms of trade and strong current transfers contributing to a steadily widening current account surplus.
We have made slight downward revisions to our 2012 inflation forecasts, prompted in large part by a significant downturn in global oil prices (our Oil & Gas team has revised down its 2012 average Brent crude oil price forecast by 4%). We are now forecasting average y-o-y consumer price inflation growth to come in at 7.8% in 2012, slightly lower than previously projected, as a trend of gradual disinflation plays out.
Key Risks To Outlook
Any greater-than-expected slowdown in the global economy (most likely an escalation of the eurozone sovereign debt crisis) would see demand for diamonds â Botswana´s key export â weaken, and thus pose downside risks to our growth forecasts. Although we do not anticipate a return to the large-scale strikes seen in the first half of 2011, the risk of sporadic outbreaks of protests and public unrest remains a realistic possibility. The government´s politically sensitive privatisation agenda has the potential to ignite tensions, bolstered by increasingly influential trade unions.
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