Brexit tensions and elections: Cause of slow economic growth

The chief executive officer of first national bank Botswana (FNBB), Steven Bogatsho, says the African countries elections and the Brexit tensions attribute to the country’s slow economic growth. Steven Bogatsho said this in Gaborone at a press briefing on FNBB’s unaudited condensed consolidated financial results and dividend announcement for the six months ended 31 December 2018.

Steven Bogatsho says growth in sub-Saharan Africa (SSA) is expected to rise to 3.8 percent and 3.9 percent in 2019 and 2020 respectively, from 3.0 percent in 2018 (IMF forecasts) on the back of both a slight improvement in commodity prices and higher investment spending. East Africa will be the major regional growth driver, as infrastructure investment and foreign direct investment into the future oil and gas industry increases over the coming years.

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“Bigger markets such as Nigeria and South Africa continue to be a handbrake for SSA growth as their expansion rates remain well below their long-term averages. However, commodity prices are dependent on global economic stability. Additionally, the upcoming elections in Ghana, Mozambique, Nigeria, South Africa, and Tanzania reduce the likelihood of those governments reining in expenditure, which could negatively impact inflation in the short term,” says Steven Bogatsho.

He said they had witnessed most economies adopting a more hawkish tone towards the end of 2018 on the back of rising inflationary pressures and the trend should continue in 2019. Countries like Botswana, Kenya, and Tanzania are expected to keep their stance unchanged; inflation is set to remain within the target range of these central banks. The inflation outlook for South Africa has improved, limiting any potential hike of 25 basis points (bps) in 2019.

By Meekaeel Siphambili

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