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Botswana Country Risk Report Q1 2019

Botswana Country Risk Report Q1 2019

Economic activity in Botswana will continue to post positive growth over the next two years, underpinned by stronger mining sector production and stronger private and public sector investment into economic diversification and value addition

Stronger activity in the mining sector will also offer tailwinds to fiscal revenues, enabling the government to invest in infrastructure projects, benefiting the construction sector in the short term and Botswana's energy generation in a multi-year time frame

Minimal levels of social unrest, strong state institutions and a history of policy continuity will all help to maintain long-term political stability in Botswana

That said, while our core view is for the ruling Botswana Democratic Party (BDP) to win Botswana's 2019 general election, the risk of a UDC/BCP win cannot be completely ruled out This scenario would involve the most radical change in Botswana's policymaking While the original members of the UDC coalition are broadly supportive of more centrist policy positions, if the BCP manages to successfully convince the other members of the UDC to accept their requests a victory of the opposition could translate into a sharp policy shift towards reforms focused on empowerment legislation and trade protectionism

We expect the Bank of Botswana (BoB) to keep its policy rate of 5 00% unchanged over 2018 and 2019 While we had previously expected the BoB to cut its key policy rate by 50 basis points (bps) in 2018, we now believe that upward risks to inflation coming from rising food prices and expansionary fiscal policies will mandate a neutral policy stance Finally, a recovery in Botswana's crucial mining sector will support a rebound in economic activity, tempering the impetus for further policy rate cuts by the BoB


Executive Summary
Core Views
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Strong Mining Production To Support Botswana's Growth
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Botswana To Maintain Solid External Position
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: TOP FIVE GOODS EXPORTS, 2017
TABLE: TOP FIVE GOODS IMPORTS, 2017
Monetary Policy
Monetary Policy To Remain On Hold In Botswana
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Botswana's Budget Deficit To Expand Despite Increase In Revenues
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES IN FY2018/19
Botswana Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Contents10-Year Forecast
The Botswanan Economy To 2027
Long-Term Prospects Still Positive
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Botswana 2019 Elections: What Could Go Wrong?
TABLE: PARTY MEMBERS OF UMBRELLA FOR DEMOCRATIC CHANGE COALITION
Long-Term Political Outlook
Strong Institutions To Limit Political Risks In Botswana
Operational Risk
TABLE: OPERATIONAL RISK
Economic Openness
TABLE: TARIFF AND NON-TARIFF TRADE BARRIERS
TABLE: FREE TRADE AGREEMENTS
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
TABLE: BARRIERS TO FDI
Utilities Network
TABLE: ELECTRICITY RISKS
TABLE: FUEL RISKS
TABLE: TELECOMMUNICATIONS RISKS
TABLE: WATER RISKS
Global Macro Outlook
Inflation And Policy Risks Rising
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % Y-O-Y
Index Tables
TABLE: BOTSWANA – MACROECONOMIC DATA & FORECASTS

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