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Home » News » Business » Sluggish mining weigh down GDP growth

Sluggish mining weigh down GDP growth

Publishing Date : 10 July, 2017

Author : AUBREY LUTE

The poor performance of commodities in the market, especially minerals has seen the country’s Gross Domestic Product (GDP) move up at a snail’s pace during the first quarter of 2017.


According to the latest statistics released by Annah Majelantle, the Statistician General of Statistics Botswana, the decrease in the real mining value added of 28.9 percent was because of the closure of copper/nickel mines during the fourth quarter of 2016.She says in the quarter under review, copper/nickel production was zero due to the provisional liquidation of the BCL mine in October 2016. On the other hand, diamond value added decreased by 2.8 percent during the quarter under review because diamond prices continue to be vulnerable to market tremors hence a reduction in diamond production.

 

Other commodities have not been doing well either, Soda Ash value added decreased by 41.5 percent because the markets remain restrained due to low demand as some of the industries utilizing the commodity have been affected by the low metal prices.

 

The statement by Majelantle further reflects that coal prices also remain depressed and stagnated which continues to negatively impact on the commodity export viability. The BCL closure also impacted on the Morupule Colliery Mine production. Other mining value added went down by 22.2 percent mainly due to a decrease in Gold production by 22.5 percent, the statement reads.

 

The estimated GDP at current prices for the first quarter of 2017 was P43, 647.0 million compared to P43, 657.4 million registered in the fourth quarter of 2016. The estimated GDP at constant 2006 prices for the first quarter of 2017 was P22, 466.4 million compared to P22, 421.6 million registered in the fourth quarter of 2016. According to the statement by Majelantle, the domestic economy increased by 0.8 percent in the first quarter of 2017 compared to an increase of 2.3 percent recorded in the same quarter of 2016.

 

“The increase was attributed to real value added of Trade, Hotels & Restaurants and Finance & Business Services which increased by 18.7 and 5.4 percent respectively. All other industries recorded positive growths of more than 1.2 percent with the exception of Water & Electricity, Mining and Manufacturing which decreased by 32.2, 28.9 and 0.3 percent respectively.”

 

Meanwhile Trade, Hotels & Restaurants growth of 18.7 percent was attributed to the increase in real value added of Wholesalers, Vehicle dealers and Hotels & Restaurants by 76.0, 7.2 and 6.3 percent respectively. Wholesaler’s value added increased significantly due to the positive performance realized from downstream diamond industries. The increase of 5.4 percent in the real value added of the Finance and Business Services industry was mainly due to the rise in the value added of Business Services and Real Estate by 8.4 and 6.2 percent respectively.

 

BCL closure also hit on water and electricity as Majelantle observes that: “Water and Electricity value added at constant 2006 prices for the first quarter of 2017 was P112.1 million compared to P165.5 million registered in the same quarter in 2016, recording a decrease of 32.2 percent. In the first quarter of 2017, Electricity recorded a negative value added of P46.7 million compared to a positive value added of P77.7 million registered in the fourth quarter of 2016.


Electricity value added decreased mainly because of the closure of the BCL mine. Total electricity distribution in kwh went down by 15.1 percent, with distribution to BCL decreasing by 79.1 percent.” In the first quarter of 2017, the real value added of water sector decreased by 7.0 percent compared to an increase of 11.1 percent recorded in the same quarter of the previous year.

 

“The decrease of 0.3 percent in the real value added of the Manufacturing industry was mainly due to the decrease in the real value added of all sub industries except other manufacturing which increased by 2.5 percent. Non mining GDP increased by 5.6 percent in the first quarter of 2017 compared to 3.7 percent registered in the same quarter of the previous year. The increase was mainly due to Trade, hotels and restaurants particularly the wholesale sub industry,” she notes.

 

In the first quarter of 2017, Trade, Hotels and Restaurants was the major contributor to GDP by 20.9 percent while Mining contribution stood at 17.6 percent. Trade, Hotels and Restaurants contribution increased because of the wholesaler’s performance which comprises of diamond aggregation processes.

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