Botswana’s economic growth is forecast to slow to 4% in 2023 from 4.3% this year, the International Monetary Fund said Wednesday.
“Relatively low fiscal buffers and continued reliance on mining expose Botswana to external shocks, such as geopolitical and climate shocks,” the IMF said in a statement. “The outlook depends on the course of the war in Ukraine, the pandemic, and implementation of fiscal consolidation and economic diversification plans.”
The projected growth is lower than the 11.4% recorded in 2021, the IMF said.
However, a successful vaccination campaign, prudent macroeconomic management, and strong demand for diamonds have allowed Botswana to recover to its pre-pandemic output level, it said.
The recovery is expected to continue through the medium term, but there is significant uncertainty, the IMF said.
“Growth will be supported by higher prices and demand for diamonds, increased copper production, prospects for a good harvest, less Covid-19 mobility restrictions, and more international tourist arrivals,” the IMF said.
Downside risks to this outlook relate to the strength of commodity markets, China’s growth, the pace of tightening of monetary policy in advanced economies, and climate shocks, it said.
The IMF said additional monetary tightening will be required, due to inflation projected at 11% this year, which is above the central bank’s medium-term range of between 3% and 6%
