Boston, MA -- (ReleaseWire) -- 05/26/2014 -- On the back of preliminary 2013 data we have made revisions to our real GDP growth forecasts for 2014 and 2015, from 4.7% and 4.9% to 6.2% and 4.5% respectively. We expect investment and private consumption to be the key drivers of growth in 2014, while net exports will be a drag.
We maintain a positive outlook on Botswana's exports in 2014 and in the next several years, driven by a recovery in the diamond sector, and the rise of the country's coal industry. This will serve to narrow the country's current account deficit, and eventually turn this into a surplus.
We have revised down our fiscal balance forecast for Botswana on the back of an announcement by President Ian Khama that public servants will enjoy a 4.0% wage increase this year. While we still project a budget surplus for 2014, this is reduced somewhat from our previous outlook.
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We expect the Bank of Botswana to maintain its benchmark interest rate at 7.50% at its next monetary policy committee meeting on April 9. While previously we had envisaged a cut, a number of factors - not least rising inflation - have caused us to revise our outlook. Nevertheless, we believe that monetary policy will remain fairly accommodative over the course of 2014.
Key Risks To Outlook
We continue to note the risks to our forecasts posed by ongoing revisions to Botswana's national accounts estimates. Amid ongoing efforts by Statistics Botswana to more accurately portray the size and structure of the economy, GDP estimates remain subject to frequent and often notable adjustments.
Given Botswana's dependence on imported energy and food any unexpected rise in global food or oil prices beyond our current projections, would pose a risk to our growth outlook.
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