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Botswana Country Risk Reports Q2 2015

Botswana Country Risk Reports Q2 2015

Core Views

Botswana is forecast to record real GDP growth of 4.5% in 2015 and 4.0% in 2016, driven by private consumption and investment spending. Falling commodity prices and an underperforming power sector present risks to this outlook.

We predict that Botswana's current account surplus will increase marginally from an estimated 14.8% of GDP in 2014 to 15.1% in 2015 on the back of our positive outlook for the diamond mining and tourism sectors. We believe that imports and exports will return to growth in 2015.

Lower fuel and energy prices will lead to a decrease in Botswana's headline inflation rate in 2015. We believe that moderate economic growth will prevent a collapse in prices and will therefore temper the disinflationary effects of falling commodity prices.


Executive Summary
Core Views
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Allied Opposition To Challenge BDP Popularity
The political status quo will return following the re-election of the long ruling Botswana Democratic Party (BDP) in late 2014. Ongoing
social issues and perceptions of undemocratic leadership will, however, boost opposition support during the current political mandate
(2014-2019), enabling these parties, as part of the Umbrella for Democratic Change coalition, to mount a credible threat to BDP's power
in the next parliamentary election in 2019.
Long-Term Political Outlook
An Incomplete Miracle
Botswana's status as one of the most stable and politically progressive countries in Sub-Saharan Africa is likely to endure for the
foreseeable future. While we see the potential for political or social upheaval as minimal, over the next decade the government will come
under mounting pressure to address the country's extreme inequality as well as face the prospect of a reinvigorated opposition.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Real GDP To Expand 4.5% In 2015
Real GDP growth will come in at 4.5% in 2015 and 4.0% in 2016, driven by private consumption and investment spending. Falling
commodity prices and an underperforming power sector present risks to this outlook.
TABLE: Economic Activity
Monetary Policy
Falling Oil Prices To Curb Inflation
Lower fuel and energy prices will lead to a decrease in Botswana's headline inflation rate in 2015. Price growth declines for transport
and households, two of the largest contributors to Botswana's consumer price index basket, have led us to revise our forecast for annual
inflation to 3.3% in 2015, down from our previous projection of 4.1%. We believe that moderate economic growth will prevent a collapse
in prices and will therefore temper the disinflationary effects of falling commodity prices.
TABLE: Monetary Policy
Balance Of Payments
Diamond Recovery Will Support Current Account Surplus
We predict that Botswana's current account surplus will increase marginally from an estimated 14.8% of GDP in 2014 to 15.1% in 2015
on the back of our positive outlook for the diamond mining and tourism sectors. We believe that both imports and exports will return to
growth in 2015.
TABLE: Curent Account
Global Economic Outlook
Key Global Themes For 2015
We expect several global macroeconomic and market themes to play out in 2015, including the return of sovereign debt risk, the
continuation of emerging market currency dilemmas, and the ramifications of a new era for oil prices coming to the fore. Emerging
market reformers will be outperformers, the US will stand alone in macroeconomic terms, and China's reform drive may spell instability
for the global economy.
Chapter 3: 10-Year Forecast
The Botswanan Economy To 2024
Long-Term Prospects Still Positive
Despite ongoing efforts by the government to diversify Botswana's economy away from a heavy reliance on diamonds, we believe the
precious stone will remain the mainstay of the southern African country's economy over the foreseeable future.
TABLE: Long-Term Macroeconomic Forecasts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
TABLE: Operational Risk
Availability Of Labour
TABLE: Sub-Sahara n Africa – Availability of Labour Risk
TABLE: Table of Botswana's Top 10 Source Countries for Migrant Workers ('000)
TABLE: Labour Force Employment by Sector (2006)
Crime Risk
TABLE: Sub-Sahara n Africa – Crime Risk
TABLE: Crime Statistics
Chapter 5: BMI Global Assumptions
Global Outlook
New Era For Oil
Table : Global Assu mpti ons
Table : Devel oped States , Real GDP GrowtH , %
Table : BMI VERSUS BLOOM BERG CON SENSUS REAL GDP GROWTH FORECASTS, %
Table : Emerging Markets , Real GDP Growth, %

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