Standard Bank has projected Botswana’s economy to grow by 3.7% in 2025, despite headwinds from reduced exports to China, one of the country’s key trading partners. The bank’s latest economic outlook suggests resilience in the domestic economy but warns that softer demand from Asia may weigh on export earnings.
In its Economy 2025 Outlook, the Bank said; “In Botswana, we forecast 3.7% y/y GDP growth in 2025, from an expected contraction of 3.5% y/y in 2024, driven largely by a slower decline in net exports and an increase in domestic spending, courtesy of increased monetary and fiscal stimulus.”
This is in sharp contrast to other economic think tanks and even the finance ministry which have since revised economic outlook to near-zero growth or even a further contraction.
The Bank stated that “The likely contraction in growth in 2024 was worsened by domestic supply-side constraints, particularly in the utilities sector where the Morupule B power plant’s maintenance works created significant energy supply shortages, while the agricultural sector’s performance remained subdued due to drought conditions in the broader southern Africa region.”
“Our baseline scenario for 2025 includes a slower decline in natural diamond prices as the market stabilizes, with production cuts potentially easing price pressure from lab-grown alternatives and 20-y high inventorie,” the report says.
Meanwhile the Bank ranked Botswana as the 5th African country in terms of export to China in the continent. The report has indicated that in terms of external risks, Botswana has lower export exposure to China. It shows that Botswana’s export to China account for 7.2 of the southern African country’s total exports. The report places the Democratic Republic of Congo (DRC) at the top, with 48% of its total exports going to China. Angola followed closely with 45%, while Zambia, Mozambique and Namibia recorded 28.7%, 17% and 15% respectively, placing them third, fourth and fifth.
Ghana was ranked the sixth highest African country in terms of exports to China.
According to the report,“Of the markets in our coverage, DRC, Zambia and Angola have a sizeable concentration of their exports that are routed to China. In Angola, around 45% of their total exports of goods go to China, while in DRC this is higher, at around 48%. In Zambia this ratio is also elevated, at around 28.7%. However, this is lower in other economies such as Botswana at 7.2%, Ethiopia 8.4%, Ghana 8.7%, Kenya 2.8%, and Nigeria at 3.3%”.
Nonetheless, the report says, oil-exporting economies such as Nigeria may still be susceptible to a
slowdown in the Chinese economy, as this may coincide with a decline in international oil prices and worsen the external position. In the past, this has exacerbated forex liquidity conditions and weighed on growth in the non-oil sector too.” However, recent pledges by Chinese authorities, to ramp up their stimulus support, may underpin economic activity in China and thereby support prices for both oil and copper,” says the report.
