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Botswana Country Risk Report Q4 2019

Botswana Country Risk Report Q4 2019

Botswana's real GDP growth will remain relatively robust in the coming years, albeit slowing in the short term, benefitting from gradual growth in coal production, significant public and private sector investment in infrastructure, and relatively accommodative fiscal policy.

We expect Botswana's fiscal deficit to widen over the 2019/20 fiscal year (April-March), as mineral revenues are set to disappoint and the government increases recurrent expenditure ahead of the October 2019 general election.

We expect that the country will continue to run a current account surplus over the next decade. That said, the surplus will gradually narrow as steadily rising incomes and continued public investment in infrastructure boost domestic demand for imports.

We expect the Bank of Botswana to enact a 50 basis point cut by end 2019 to stimulate GDP and credit growth, taking advantage of a dovish turn in developed market central banks, before shifting to a neutral policy stance in 2020.

The ruling Botswana Democratic Party (BDP) is likely to retain a slim majority in the October 2019 general election, in turn increasing President Mokgweetsi Masisi's prospects for re-election. That said, the BDP's majority will likely erode further, given splintering within the party, and we cannot preclude a hung parlia-ment in October 2019, posing risks to policymaking. Over the long term, strong state institutions and a history of policy continuity will help to maintain political stability in Botswana.

Key Risks

More sustained adverse weather conditions affecting crop production would be negative for private consumption and overall economic growth over the long term.

A hung parliament and/or an unstable governing coalition following the October 2019 election could lead to policymaking stasis, with a negative impact on investment.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Growth To Slow Amid Weak Mining And Construction Sectors
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
Current Account Surplus To Continue Narrowing Over The Short Term
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: TOP FIVE GOODS EXPORTS, 2018
TABLE: TOP FIVE GOODS IMPORTS, 2018
Monetary Policy
Bank Of Botswana To Cut Interest Rates By The End Of 2019
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Budget Deficit To Widen In FY2019/20, Narrowing Thereafter
Botswana Country Risk Q4 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 is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsStructural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES IN FY2019/20 (APRIL-MARCH)
10-Year Forecast
The Botswanan Economy To 2028
Long-Term Prospects Remain Positive
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Ruling Party Likely To Retain Majority In October 2019 Elections
Long-Term Political Outlook
Strong Institutions To Limit Political Risks
Operational Risk
TABLE: OPERATIONAL RISK
Labour Costs
TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE
Legal Environment
TABLE: BUREAUCRATIC PROCEDURES
TABLE: BUREAUCRATIC BARRIERS
Global Macro Outlook
Global Growth Deceleration, But Policy Increasingly Supportive
TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: BOTSWANA – MACROECONOMIC DATA AND FORECASTS

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