Business Year That Was

| December 30, 2014 | 0 Comments

The year 2014 has been promising as the local economy bounced back to register growth in the second quarter.

Presenting the 201415 budget in February, the Minister of Finance and Development Planning, Mr Kenneth Matambo said the economy was projected to register growth of 5.1 per cent this year driven by the expected growth in some non-mining sectors such as trade, hotels and restaurants and finance and business sectors.

The International Monetary Fund (IMF), however, reduced the expected growth to 4.4 per cent as the mining sector, which contributes more than 20 per cent to GDP, continued to face challenges.

Information from Statistics Botswana shows that the economy registered a growth of 1.6 per cent in the second quarter after a slump in the first quarter of this year.

On an annual basis, real GDP grew by 4.5 per cent in the second quarter as the Index of Mining Production (IMP) stood at 106.6 showing negative year on year growth of 4.5 per cent.

However, economic growth was driven mainly by non-mineral sectors as the mining economy declined. Copper-nickel-cobalt matte declined by three per cent followed by diamonds which also went down by 1.3 percentage points followed by gold with a negative growth of 0.3 per cent.

On the fiscal side, the government presented a budget with a balance estimated at P1.326 billion, or 0.97 per cent of forecast 201415 GDP.

Parliament recently passed the Value Added Tax (Amendment) Bill which exempted basic food staff and farming equipment from VAT and further increased the threshold to encourage Small and Medium Enterprises.

The country enjoyed low inflation rate this year and it continued to be within the Bank of Botswana objective. In October and November, the annual rate stood at 4.3 per cent, and the central bank has maintained a bank rate of 7.5 per cent since December last year.

This, according to analysts, has provided a favourable climate as it meant low cost for borrowing especially businesses although there were concerns about household credit, but according to the central bank, it has slowed down, easing pressure on the financial sector.

The recent reduction in fuel pump prices was also expected to further ease the inflation rate.

Retail pump prices for petrol and diesel were reduced by 60 thebe on December 6 this year as international crude oil prices continued to decline and Brent prices averaged US$80.37 per barrel in November.

Source : BOPA

Source : Botswana Daily News

Category: Business & Finance

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