Global recovery and food and transport prices could lift inflation through the mid-point of the 3-6 percent range in 2017. This is according to Standard Bank economist, Michael Kafe who was giving a presentation on Thursday during an engagement by Stanbic bank with Non-Bank Financial Institutions (NBFI). Inflation, Kafe noted, is likely to rise from the current levels expecting a 2.8 percent in 2016 and to 4.2 percent in 2017.
Kafe expects weak growth prospects and Botswana Pula/South African Rand stability to help keep inflation in check. He further noted that the introduction of the crawling peg since 2005 to allow for automatic nominal adjustment of Pula should help avert large exchange rate misalignments that call for massive re/devaluation that are often hostile to price stability. With regard to the GDP Kafe – who does not foresee a robust return by Botswana to historical growth rates – said GDP will be lower than long term average with 3.8 percent predicted in 2016 and 4 percent in 2017. The long term average GDP is 6.2 percent year-on-year.
The National Development Plan (NDP) 11 is expected to boost medium term outlook, however on-going fiscal consolidation programme, Kafe said will place a lid on 2016-2018 GDP growth adding that the largest share of 2016/17 budget has been allocated to the security sector, where multiplier effect on GDP is arguably low. Kafe said the country runs the risk of not revisiting historical high growth rates due to sub-par medium term recovery of global demand for commodity/diamond prices especially if diversification is not sped up.
The Thursday conference served as a platform for Stanbic Bank to share its insights and contribute towards the economic growth initiatives driven by the bank’s NBFI clients.Head of Corporate and Investment Banking at Stanbic Bank Botswana, Sheperd Aisam, said the bank values and recognise the role played by NBFI in the growth and development of the local economy.
The event, which was attended by insurance brokers, stock brokers, pension funds and asset managers, was aimed at equipping the Botswana NBFI sector to drive its growth beyond Botswana’s borders. Stanbic Bank says it has through its Investor Services division, supported the NBFI sector for over 20 years and has a wealth of expertise that provides custody services to clients investing across the region in 15 markets where Standard bank Group has presence and over 100 markets globally through Global Custody Offering.