Business confidence falls

SHARE   |   Monday, 27 June 2016   |   By Staff Writer
Business confidence falls

Business confidence in Botswana has supposedly went down and failed to meet the expectation for the first half of 2016, according to the Business Expectations Survey (BES) carried by Bank of Botswana (BoB). The survey, which is undertaken twice a year by the Central Bank, indicates that the overall confidence in the prevailing business conditions for H1 2016 is at 36 percent, eight percent lower than the level that prevailed during the September 2015 survey (H2 2015). “This was considerably lower than the 45 percent expected for this period at the time of the previous survey, a clear indication that expectations have been revised downwards,” the bank said in a statement.

The central bank, which is under the leadership of Governor Linah Mohohlo, notes that the continued subdued level of confidence possibly reflects the recurring water shortages in the Greater Gaborone area as well as the continuing – though reduced – risks of power shortages. “Nevertheless, similar to the trend in recent surveys, the anticipated level of optimism for the rest of the survey period (next 12 months) rises, in this case to 62 percent.” Current confidence among domestic-oriented businesses is reported to be at 31 percent, significantly lower than 44 percent in the previous survey, but rising to 58 percent towards the end of the survey period.

The survey shows that there has been a substantial increase in confidence levels of export-oriented businesses from 33 percent in the previous survey to 71 percent in the current period. “The business confidence for export-oriented firms further improves to 88 percent over the next 12 months. Thus, the overall recovery in confidence for the second half of 2016 and the first half of 2017 is due to revival in confidence for both export and domestic oriented businesses.” Respondents to the survey are also said to have lowered their optimism about the demand for their products during 2016.

“In turn, this feeds through to some downward revisions in expectations regarding employment and profitability, especially later in the survey period.” Furthermore, the survey indicates that most respondents anticipate operating between 50 and 60 percent of their productive capacity in the current period. “Thus, the current levels of capacity utilisation by businesses are broadly comparable with those reported in the September 2015 survey, hence suggesting that the business environment is still challenging but stable.”

On national output, the bank, on average expects real GDP to grow by 3.3 percent in 2016 and by 3.5 percent in 2017 with the figures believed to be substantially lower than the government forecast of 4.2 percent and 4.3 percent for 2016 and 2017 respectively as announced in the 2016 budget speech.