Botswana Economic Outlook

• In 2012 inflation is expected to ease and real Gross Domestic Product (GDP)growth projected to fall back slightly.
  
• The country still faces high levels of poverty, inequality and unemployment.
  
• Youth unemployment is posing a major challenge that Botswana aims to address through various policy initiatives.
  

In 2011 real GDP growth remained robust thanks to excellent performances in mining, construction and manufacturing. Growth is expected to fall back in 2012 and return to a robust level in 2013. Inflation is expected to drop within the objective range of 3% to 6% in 2013 as a result of projected declines in public spending in 2012. The country is undergoing fiscal consolidation following the increased budget deficits caused by the global financial crisis. The government is committed to reducing the budget deficit and achieving a balanced budget by 2012/13, through improved revenue collection and restrained recurrent and development expenditures, while maintaining economic growth. The external debt level is low and sustainable and is estimated to decline to 20.4% in 2011 and further to 12.3% of GDP by 2015, in line with fiscal consolidation measures that focus on completion of continuing infrastructure projects and limited expenditure on high-return projects.

In spite of its impressive economic performance, Botswana still faces high levels of poverty, inequality and unemployment, as well as high HIV/AIDS prevalence rates. Although there has been a decline in the proportion of the population living below the poverty line, from 30.6 % in 2002/03 to about 20.7 % in 2009/10, the poverty level is high by middle income country standards and is coupled with severe income inequality.

Unemployment stands at 17.6% with youth unemployment posing a major challenge.

According to the labour force survey of 2005/06, unemployment in the 12-29 age group accounted for 63.4% of the total unemployed labour force. Botswana is addressing these challenges through poverty reduction initiatives, involving implementation of job creation programmes.