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Stable Economy

The economic success of Botswana is attributable to successful exploitation of its vast mineral resources, especially diamonds. Botswana continues to be the largest exporter of gem diamonds in the world in terms of value.

The economy of Botswana has since the commencement of the global financial crisis realized an economic performance below her potential. In 2008, only a sluggish real economic growth of 3.1 percent was recorded and a contraction of 3.7% was then subsequently recorded for 2009. This being the case though, the economy of Botswana has started to show some good performance in line with the global economic recovery. In particular, the improvement of diamond and copper sales in the world market has seen the mining sector experience a 21.7% increase from a low base. This great growth rate of the mining sector, together with the growth of the rest of the economy at 6.3%, saw the economy of Botswana register a real economic rate of about 10.7% over the four quarters ending September 2010. The economy is expected to grow in real terms by 6.8% in 2011 and 7.1% in 2012, this being subject to a growth over the same period of at least 15% and 6.2% respectively for the mining sector as the largest contributor to GDP.

One major pillar of Botswana’s macroeconomic policy is to maintain a stable and manageable inflation and exchange rate in order to improve Botswana’s competitiveness in international markets and contribute to the broader national objectives of sustainable economic development and employment creation. Year-on-year inflation continues to be under control having reduced from 8.2% in 2009 to 6.9% in 2010. It is anticipated that the rate will fall within the medium term inflation objective of the bank of Botswana at 3 – 6% from the second quarter of 2011. With the prospects of a low and stable inflation in the medium term, the Bank of Botswana embarked on an “economic growth supporting” monetary policy that seeks to maintain price stability as well as influence the inflation outlook. The Bank Rate has been reduced to 9.5% in December 2010 and this was followed by commercial banks’ reduction of the prime lending rate to 11% as of December 2010.

Botswana Gross Domestic Product

by Type of Economic Activity (Constant 1993/94) P Million

 

Economic Activity

2004

2005

2006

2007

2008

2009

Agriculture

420.6

401.2

397.4

432.8

434.3

566.3

Mining

8962.1

9134.2

9821.0

9662.6

9308.1

7366.6

Manufacturing

703.3

785.4

811.0

952.8

972.3

925.8

Water and Electricity

488.5

490.5

519.8

544.9

574.1

578.9

Construction

1074.7

1009.4

1032.9

1183.0

1208.7

1366.8

Trade, Hotel & Restaurants

2156.2

2051.7

2245.1

2487.7

2641.9

2728.1

Transport, Post and Telecommunications

639.2

720.7

794.8

881.8

1011.0

1132.1

Banks, Insurance & Business Services

2051.2

2238.5

2404.6

2606.3

2996.6

3112.3

General Government

3557.3

3740.0

3693.4

3847.6

4146.6

4299.6

Social & Personal Services

820.9

902.9

921.4

973.8

1040.1

1165.8

Adjustment items

1191.13

988.5

  937.9

  1175.8

  1186.5

  1345.6

Total GDP (Aggregate)

22102.2

22462.9

23614.1

24749.1

25520.2

24587.9

Total GDP excl. Mining

13140.2

13328.7

13758.4

15086.5

16212.1

15,462.8

Source: Central Statistics Office

Botswana GDP by Economic Activity (2009)

GDP by Economic Activity

Source: Bank of Botswana, BFS November 2010

Gross Domestic Product per Capita

Botswana had real GDP per capita of about P12 673 in 2005/06. Total Per Capita GDP (including mining) declined marginally by 1.5% in 2005/06.

 

 

2004

2005

2006

2007

2008

2007/08

GDP per capita (Pula)

12875.1

12973.6

13530.1

14084.3

14425.4

13468.1

GDP per capita excl. Mining

7654.5

7698.1

7883.4

8585.8

9163.7

9657.5

Source: Bank of

Source: Bank of Botswana, BFS November 2010

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