Released this week, the Bank of Botswana's (BoB) biannual Business Expectations Survey reveals that only 50 percent of businesses are positive about businesses conditions in 2012. The figure is down from 67 percent confidence in 2012 business conditions as reported in the March edition of the survey.
Seventy-one percent of export businesses were confident of business conditions in the first half of 2012, with the figure declining sharply to 43 percent for the whole year. "Although business confidence is currently very high among exporters, this deteriorates sharply, especially later in 2012, probably due to concerns about the deteriorating health of the global economy, which may have implications for export markets," the September survey reads.By comparison, confidence in 2012 among non-exporters rises from 46 percent at the beginning of 2012 to 51 percent for the whole year.
"The declining confidence among exporters appears to be a reflection of prospective deterioration in export markets, while the subdued mood among domestic businesses may indicate concerns about the effect of (the) fiscal policy stance of curtailing expenditure, the commitment by the government to give priority to local companies in procurement notwithstanding," reads the survey.
Economists have said while the countries in Europe affected by debt crises may be insignificant trade partners with Botswana, the risk of a continent-wide recession will affect export sectors such as diamonds and beef.
Despite the lower confidence, a majority of businesses participating in the survey expect to increase expenditure on all categories of investment goods in both the current period and the first half of 2012.
A high majority of surveyed firms also expects rising input costs in 2012, with 89 percent of respondents expecting costlier materials and 63 percent anticipating higher wages.
BoB also found conservative estimates of economic growth for 2011 and 2012 among respondents. Businesses raised their outlook of economic growth for 2011 to 3.7 percent from 2.1 in the March survey, while also reviewing their forecasts for 2012 to 3.9 percent from 3.2.
"However these rates of growth are very conservative compared with other indicators, including recent estimates of actual growth and the government's published growth forecasts (both of which are significantly higher) that might be expected to underpin such expectations," BoB said.
"It is notable that the expectations for growth vary significantly across sectors, with the estimates from mining and utilities companies being more in line with government forecasts than those for construction and agriculture."Surveyed respondents gave conservative estimates of growth in the construction sector, despite official statistics indicating that the sector was the fastest growing in the first half of 2011. The survey sample covered 100 businesses in agriculture, mining, manufacturing, water and electricity, construction, trade, transport, and financial and business services. For this edition, only 46 percent of surveyed businesses completed questionnaires, compared to 65 percent in the previous survey.
"This is the lowest response rate since the survey in September 2005, and is a matter for concern as it may undermine the usefulness of the survey results," BoB said.
