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Home » News » Business » Domestic economy increased 1.0 percent

Domestic economy increased 1.0 percent

Publishing Date : 09 October, 2017

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The latest Statistics Botswana Gross Domestic Product (GDP) second quarter report indicates that the domestic economy increased by 1.0 percent in the second quarter of 2017 compared to an increase of 3.9 percent recorded in the same quarter of 2016.


The small increase was attributed to real value added of Water & Electricity, Transport & Communications and Finance & Business Services which increased by 6.0, 5.9 and 5.6 percent respectively. All other industries recorded positive growths of more than 1.2 percent with the exception of Mining and Manufacturing which decreased by 13.8 and 0.2 percent respectively.


The estimated GDP at current prices for the second quarter of 2017 was P43, 005.2 million compared to P43, 645.6 million registered in the first quarter of 2017. The estimated GDP at constant 2006 prices for the second quarter of 2017 was P22, 886.1 million compared to P22, 465.4 million registered in the first quarter of 2017.


Transport and Communications growth of 5.9 percent was attributed to the increase in real value added of Air transport, Road transport and Post & Communications by 9.3, 7.9 and 6.1 percent respectively. The increase of 5.6 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 8.3 and 6.4 percent respectively.


The decrease in the real mining value added of 13.8 percent was because of the closure of copper/nickel mines during the fourth quarter of 2016. In the quarter under review, copper/nickel production was zero due to the provisional liquidation of the BCL mine in October 2016.


The year on year growth compares the second quarter of 2016 value added which has copper contribution and the current period without copper value added. The copper/nickel statement will stay valid until publishing the third quarter of 2017. On the other hand, diamond value added increased by 12.9 percent during the quarter under review. Diamonds production in carats increased by 12.9 percent in the second quarter of 2017 compared to a decrease of 12.1 percent recorded in the same quarter of 2016.


Soda Ash value added decreased by 25.4 percent because the mine was placed under care and maintenance in May 2017 in order to remain in a state of readiness. Water and Electricity value added at constant 2006 prices for the second quarter of 2017 was P205.9 million compared to P194.2 million registered in the same quarter of 2016, recording an increase of 6.0 percent. In the second quarter of 2017, Electricity recorded a positive value added of P24.0 million compared to a negative value added of P46.7 million registered in the first quarter of 2017.



The improvement in the Electricity real value added is attributed to an increase in local electricity production by 38.9 percent and a decrease of 52.3 percent in electricity imports. Morupule B Power Station was operating at full capacity using the four units during the quarter under review. In the second quarter of 2017, the real value added of water sector increased by 4.6 percent compared to an increase of 29.5 percent recorded in the same quarter of the previous year. Water consumption in kilolitres rose by 4.1 percent during the quarter under review.


Trade, Hotels and Restaurants real value added increased by 2.4 percent in the second quarter of 2017 as compared to 20.1 percent registered in the same quarter of the previous year. The slow growth is attributed to the decrease in real value added of wholesale sub sector by 11.0 percent. Wholesaler’s value added decreased because downstream diamond industries contributed less to the industry during the quarter under review. Diamond exports in value terms went down by 39.7 percent.


The decrease of 0.2 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 0.4 percent. Non mining GDP increased by 3.1 percent in the second quarter of 2017 compared to 7.0 percent registered in the same quarter of the previous year. Trade, Hotels and Restaurants remained the major contributor to GDP by 20.2 percent followed by General Government at 14.9 percent while Mining came third by 14.7 percent. Trade, Hotels and Restaurants contribution increased because of inclusion of diamond aggregation processes under wholesale sub sector.


Total final consumption expenditure recorded an increase of 6.3 percent in the second quarter of 2017, whereas in the same quarter of the previous year it rose by 0.4 percent. Household final consumption increased by 7.6 percent, Government final consumption increased by 3.7 percent and Fixed capital formation decreased by 15.4 percent in the quarter under review. Imports of machinery & equipment and transport & equipment also decreased by 30.9 percent and 26.6 percent respectively.


In the case of foreign trade, real exports of goods and services decreased by 33.6 percent in the second quarter of 2017 compared to an increase of 12.9 percent realized in the same quarter of 2016. Diamond is the major export commodity. Exports of diamonds in Pula decreased by 39.7 percent in the second quarter of 2017 compared to an increase of 36.8 percent registered in the same quarter of 2016.


Imports of goods and services recorded a decrease of 25.3 percent during the quarter under review, compared to 7.4 percent decline realized in the same quarter of the previous year. Botswana’s economy ended 2016 strongly with a trade surplus of P13.4 billion, a stark reversal from the P9.7 billion trade deficit recorded in 2015. This was the largest yearly trade surplus in over sixteen years. Botswana’s rough-diamond exports bounced back last year after a plunge in 2015, helping the country return to economic growth. The nation shipped about P40 billion of rough diamonds in 2016, a jump of 54 percent, according to the Bank of Botswana. The country’s total exports, of which 83 percent are diamonds, grew by an estimated 26.4 percent in 2016.


According to the World Bank, Botswana’s economy is expected to keep up the momentum was projected GDP growth rates of 4.1 percent in 2017, driven mainly by an expected improvement in the mining sector as demand from developed economies stabilizes. Continued fiscal stimulus is expected to drive the non-mining activity thus contributing to the positive performance. However, SACU transfers will remain soft mainly due to a weak near-term economic outlook for South African growth.

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