Botswana may fall short of 4.2% growth target, cenbank official says

FILE PHOTO: Buildings are seen in the Central Business District (CBD) in the capital Gaborone, Botswana, September 21, 2018. REUTERS/Siphiwe Sibeko/File Photo

By Brian Benza

GABORONE (Reuters) - Botswana's economy may fall short of the government's 4.2% growth target for this year, a senior central bank official said on Tuesday, citing global and domestic constraints.

Finance minister Peggy Serame made the projection for a 4.2% increase in GDP in a budget speech in February, saying the government expected growth to accelerate from 2023 due to an improved performance in the diamond sector. Gross domestic product grew 2.7% in 2023.

However, Botswana's mining sector, which is dominated by diamonds, is still struggling, reflecting sluggish market conditions globally.

Sales at Debswana Diamond Company, a joint venture between the southern African country's government and Anglo American's De Beers unit, were down about 48% year-on-year in the first quarter of 2024.

"From what we have seen in the first half of the year, unfavourable global economic conditions ... as well as domestic structural constraints, one would expect that we are unlikely to attain the projected economic growth," Innocent Molalapata, the central bank's director of research and financial stability, told an economic briefing.

"A downward revision of the growth target might therefore be required," Molalapata said, adding that mining output contracted roughly 27% in the first quarter.

The Bank of Botswana tends not to give precise GDP growth forecasts, leaving that to the finance ministry.

The International Monetary Fund forecasts Botswana's economy will grow 3.6% in 2024.

(Reporting by Brian Benza; Editing by Tannur Anders, Alexander Winning and Susan Fenton)