Botswana flag Botswana: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Botswana has one of the strongest economies in Africa and, even though the country was affected adversely by the pandemic, Botswana's economy showed a significant recovery in 2021. According to the IMF, GDP grew by an estimated 9.2%, mainly driven by a rebound in diamond exports and an increase in domestic demand. In the coming years, the country's economy should continue to grow, albeit at a slower pace. According to IMF forecasts, GDP growth is expected to reach 4.7% in 2022 and 4.4% in 2023. Investment in the mining sector and the rebound of the prices of hard commodities (diamond, copper, and nickel) should contribute to this performance.

Botswana has always maintained a conservative fiscal policy and low levels of foreign debt and, although general government debt increased to an estimated 22.8% in 2022 following a large fiscal response to the COVID-19 pandemic, Botswana's debt is still substantially lower than its neighbours. In 2022, the debt-to-GDP ratio is expected to widen to 27.2% and then decrease to 26.7% in 2023, with the phase-out of pandemic measures. The overall deficit should decreased to an estimated 4% in 2021, and continue a downward trend in 2022, reaching 1.9%, before increasing to a surplus of 2.4% in 2023, mainly due to the recovery of diamond revenue and an increase in tourism. In 2021, inflation remained withing the central bank’s 3 – 6% target range, at an estimated 5.8%. However, inflation should decrease in the coming years, reaching 5% and 4.4% in 2022 and 2023, respectively. To fight the effect of the pandemic on its economy, the government of Botswana continued implementing a series of fiscal measures in 2021. Although the country's “Economic Recovery and Transformation” plan created fiscal pressures on the short run, Botswana's recovery packages have been effective in boosting economic activity, which has been gradually recovering. The fiscal consolidation policy the government is implementing should contribute to reducing the deficit and rebuild buffers in the medium term. Despite these positive outlooks, the growth level will remain too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants. The government’s priority is to diversify the economy, making it less dependent on a volatile mining sector, and rely more on agriculture, services, and manufacturing. Botswana is working to expand its services industry by creating 'hubs' in the health, education, innovation, financial services, and tourism sectors, which it hopes will also strengthen its regional integration. Public spending will continue to advance at a more rapid pace, prioritising areas identified in the National Development Plan 11 (NDP11) that focuses on three key objectives: tackling poverty, ensuring inclusive growth, and job creation.

Botswana is regularly ranked first among African countries regarding governance and transparency. Its primary assets are its robust regulatory framework and facilitated procedures for property registration. However, despite its relative prosperity, Botswana still has one of the highest levels of inequality in the world and suffers a high unemployment rate and a lack of skilled labour. In 2021, the unemployment rate in the country was an estimated 24%, and it was especially high among young people. In September 2021, the country approved the The National Employment Policy for Botswana, a plan which aims to provide a comprehensive response to the challenge of unemployment facing the country.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 16.59e15.06e17.6119.0020.61
GDP (Constant Prices, Annual % Change) 3.0e-8.5e9.24.74.4
GDP per Capita (USD) 7,219e6,420e7,3507,7718,257
General Government Balance (in % of GDP) 0.00.00.00.00.0
General Government Gross Debt (in % of GDP) 16.319.5e22.827.226.7
Inflation Rate (%) 2.71.9e6.78.94.5
Current Account (billions USD) -1.40-1.59e-0.71-0.370.50
Current Account (in % of GDP) -8.4-10.6e-4.0-1.92.4

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Botswana Pula (BWP) - Average Annual Exchange Rate For 1 GBP 14.7213.3213.6113.5014.69

Source: World Bank, 2015

 

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Latest Update: July 2022

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