Botswana’s economy in recession after contraction in third quarter

December 24, 2015, 1:40pm

A mining truck carries diamond-bearing kimberlite rock away from the pit floor at the Jwaneng mine, operated by the Debswana Diamond Company. Picture: BLOOMBERG

By Tiisetso Motsoeneng and Mfuneko Toyana, Reuters on Business Day Live

GABORONE — Botswana’s economy shrank 3.7% in July-September compared with the previous three months as diamond and copper production plunged, its second quarterly contraction in a row and marking a technical recession.

Official data on Thursday revised second-quarter growth to -0.1% compared with the previous January-March period.

Gross domestic product was 3.5% lower in the third quarter compared with a year before, with annual growth revised to 1.7% in Q2, Statistics Botswana said.

"The decline in GDP growth rate was attributed to a decline in diamond production by 33.4%," the Central Statistics Office said in a statement.

A sharp decrease in copper production, by 14.1%, also contributed to the economy contracting for the second consecutive quarter.

Botswana’s President Ian Khama announced a bold economic stimulus package in November as a sharp drop in demand for its diamonds hampered growth.

Earlier in December, Botswana’s Treasury said it needed an additional $123m for the 2015/16 financial year to fund measures to ease water and power shortages.

On Wednesday, the International Monetary Fund warned that it expected Botswana’s growth to slow to 2.3% in 2015, compared with 4.4% growth in 2014, due to weak global demand for diamonds and falling customs revenues.