2014 BUDGET SPEECH (PART 2) GLOBAL AND REGIONAL ECONOMIC REVIEW AND OUTLOOK Madam Speaker, recovery in the global economy continued to be weak during 2013, thus impacting negatively on the domestic economic performance. The world economic activity is projected to remain subdued, largely as a result of the slow pace of recovery in the euro area, as well as weaker domestic demand and slowing growth in some key emerging market economies such as China and India. According to the International Monetary Fund’s latest issue of the World Economic Outlook of January 2014, world output growth declined to 3.1 percent in 2012, down from 3.9 percent in 2011. It was projected to further decline to 3.0 percent in 2013, before recovering slightly to 3.7 percent in 2014, underpinned by the recovery in emerging economies. Despite losing some growth momentum, emerging economies were projected to grow, on average, by 4.7 percent in 2013, down from 4.9 percent in 2012, with prospects to reach 5.1 percent in 2014. However, advanced economies are expected to register a growth of 2.2 percent in 2014, representing a slight recovery from the 1.3 percent for 2013. In response to this modest growth environment, policy makers around the world continue to maintain accommodative monetary and fiscal policy positions, with some committed to maintaining stimulus policies until there is evidence of sustained growth. Specific measures include: balancing the budget and reducing sovereign debts, as part of fiscal consolidation; undertaking further structural reforms to foster competitiveness of their economies in the medium to long-term; and maintenance of adequate liquidity support to the financial sector. These measures underlie the expected global growth rate of 3.7 percent in 2014. Madam Speaker, due to trade interdependence with the rest of the world, the regional economic performance continued to be influenced by slow pace of recovery in the global economy. This is because most of the countries in the region including Botswana, still largely depend on the global economy as a market for their primary products. Therefore, to the extent that global growth remained weak, these economies grew moderately by 4.9 percent in 2012, compared to 5.5 percent in 2011, and are projected to have registered a growth of 5 percent in 2013 and 6 percent in 2014. The importance of the global and regional economic performance to Botswana cannot be overemphasized. As a small open economy dependent on the export of primary products, mainly diamonds, Botswana is susceptible to economic developments in the major and emerging economies. My Ministry will therefore, continue to monitor developments in the world economy, with a view of determining their likely impact on the proposed budget and suggest mitigating measures where necessary, particularly to comply with our fiscal rule. However, I remain optimistic that the global and regional growth forecasts will be realised, thus obviating the need to adjust our proposed budget for the next financial year. Madam Speaker, the overall economic performance of the SADC region was not satisfactory in 2013, largely due to a sluggish growth in the global economy that I have alluded to. Economic growth in the region averaged 5.0 percent in 2012 compared to 5.4 percent in 2011, which is much less than the regional target of 7 percent. Further, the region was projected to have slowed down to 4.9 percent in 2013. On the other hand, the average inflation rate of 7.2 percent was recorded for the region in 2012, the same rate attained in 2011. For 2013, average inflation rate was expected to have decelerated to 6.3 percent. Madam Speaker, the SADC region continues to face challenges, particularly in the area of trade facilitation. To this end, the region will enhance border efficiencies by harmonising operating hours at adjacent borders where operating hours are different and to also implement the one stop border post programme at some borders. In the case of Botswana, this entails alignment of hours of operation at Kazungula border and the establishment of a One Stop Border Post at the Mamuno/Trans-Kalahari border between Botswana and Namibia.
Posted on: Mon, 03 Feb 2014 12:25:19 +0000
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