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A murky horizon

A murky horizon

Companies anticipate tough first half of the year

Local companies expect business conditions to deteriorate in the first two quarters of 2020, a recent survey has established.

The Business Expectation Survey (BES), a quarterly review conducted by Bank of Botswana (BoB), suggests the business world is pessimistic over conditions in the first half of the financial year due the current Covid-19 created circumstances.

According to the survey’s findings, companies expect sales, profitability, exports of goods and services and other investments to decline in both the first and second quarters of 2020.

Imports of goods and services are also expected to drop in the first quarter of 2020 and then remain constant in the second quarter of the year.

The plunge in confidence is consistent with the perceptions of weaker economic growth in the first quarter of the year and the overall contraction of the economy.

The bank says the perceived weaker economic performance declared in the current survey compared to previous studies is largely down to the disruption of business operations caused by the Covid-19 pandemic.

While business confidence is forecast to fade, companies also expect cost pressures to be subdued in the second quarter of the year, mainly attributable to the expected downward pressure on cost of materials, utilities tariffs, wages and other inputs of production.

When it comes to the major impediment facing companies, particularly those in the manufacturing, finance and business, trade, hotels, restaurants, transport and communications industries, firms have once again singled out the difficulty in accessing financing from abroad as the greatest challenge to their business operations.

The second major barrier cited is the unavailability of skilled workers. This is said to be most predominant in the construction and manufacturing sectors, reflecting reported difficulties experienced in recruiting foreign skilled labour.

Furthermore, a number of companies, mainly in the manufacturing space, have highlighted shortage of raw materials as the greatest challenge to their business operations.

On a positive note, the local political climate, domestic demand and the current regulatory framework are viewed as supportive factors to doing business in the country.

It has also been observed that water and electricity sub-sectors contribute positively to economic activity. This is believed to be a reflection of an improved supply of these utilities, which has previously been a serious challenge.

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