More economic woes

The heavy decline of the mining sector performance recorded in the third quarter of last year is likely to push the economy further into recession after the Gross Domestic Product (GDP) withered by 6%.

Latest data on GDP released by Statistics Botswana (SB) shows that real GDP decreased by 6% in the quarter under review but showed slight improvement compared to deep 24% fall in the last quarter.

This came in the wake of growing government financial constraints ahead of the 2021/22 budget speech.

A Savingram from Ministry of Local Government and Rural Development cautioned of budget challenges in the financial year 2020/21 which necessitated measures to conserve money.

The third quarter decline in GDP was attributed to among others a decrease in the real value added of mining by 15.2% influenced by Diamond and Soda as real value added.

“Diamond production in carats went down by 15.3 percent while Soda Ash production in tonnes decreased by 53.1 percent. This poor performance of the diamond’s sub industry is attributed to the reduction in the production due to weak demand from global markets,” Statistics Botswana said in the report.

Diamonds are luxury goods and therefore are bound to fluctuate due to the appetite of reliable customers as the world is hit by coronavirus, noted the statistics agency.

With regard to the Soda Ash, SB uncovered that the plant was put under care and maintenance. In the period, trade hotels and restaurants real value added declined by 15.3% compared to an increase of 5.3% registered in the same quarter of the previous year.

The reduction is largely attributed to a decrease of 49.9% in real value added of the Hotels and Restaurants sub-industry.

“The suspension of air travel occasioned by Covid-19 containment measures has impacted on the number of tourists entering the borders of the country and hence affecting the output of Hotels and Restaurants industry. COVID-19 restriction measures resulted in reduced demand for leisure and conferencing activities as conferences are held through virtual platforms,” the agency added.

The services sector was one of the positive contributors to GDP prior to COVID-19.

For example, during the same period in 2019, the trade, hotels and restaurants contributed significant 19.4% to GDP growth in Q3 2019 all combined.