Covid-19 Vaccine to inspire world economic boom in 2021

RMB Botswana, a division of First National Bank Botswana says the global economy is expected to experience a Covid-19 vaccine inspired boom from the second half of 2021.

This projection was the main takeaway from a recent Global Markets webinar hosted by First National Bank Botswana which aimed to provide strategic solutions to clients as they continue to navigate their way through local economic challenges, as well as offer a broader insight into the global economic landscape.

“The global economy is expected to see a vaccineinspired boom from the second half of this year. This is already helping Batswana through the sharp boom in commodity prices, including the normalisation in the diamond market. South Africa’s economy is only expected to return to its 2019 size in 2024, and the optimism around the coming global economic boom has translated into a “reflationrisk” on surge in financial markets.” Said RMB Client Strategist, John Cairns.

RMB notes that in understands the diverse impact that the COVID-19 pandemic has had on businesses operating in Botswana and the disruptions

FNBB Economist Moatlhodi Sebabole.

caused to supply chain logistics.

“Hosting this webinar shortly after the national budget was presented, created the opportunity to share valuable market insights with clients – allowing clients to make informed and sound business decisions,” said FNBB Economist Moatlhodi Sebabole.

According to Sebabole, Botswana’s economy which is expected to have registered a contraction of 8.1% in 2020 and anticipates that economic growth will rebound to 3.9% in 2021 while budget deficits are anticipated to run through the remainder of NDP 11 – resulting in government funding need of over P50 bio which will cover the deficits and ERTP.

“Inflation is expected to average closer to 3% in 2021 (1.9% in 2020). The upward pressures will emanate mostly from the supply side, including the transport group index as the fuel levy is anticipated to increase from P0.12 to P1.12, effective 1 March 2021; as well as VAT increases to 14% (currently 12%), and anticipated levy increases on water and electricity. Bank rate is expected to reduce by further 25bp and stay flat through the forecast horizon period. Botswana pula will mainly be driven by movements in USD/ZAR due to the currency peg and volatility in the Rand,” elucidates Sebabole.

The global economy is expected to see a vaccineinspired boom from the second half of this year.