With the recent price decrease on petrol, diesel and illuminating paraffin after skyrocketing in 2023, Botswana Energy Regulatory Authority announced the ray of hope of economic recovery of Botswana.
Though economists and analysts may argue about the extent to which petroleum retail pump prices affect the economy and the consumer price index, there is a correlation between consumer confidence, spending habits and petroleum prices.
The globally spiked fuel prices were due to the Russia/Ukraine war strained consumers as high fuel prices mean less spending on other goods and services.
Independent economist, Mr Louis Sibanda said in an interview that the public should be cognizant that the economy needed to first adjust in accommodation of the fuel price.
“It is not automatic that there will be a reduction in commodity prices immediately at the announcement of a fuel price reduction as commodity prices turn to be sticky and do not respond immediately at the proportionate percentages,” he said.
He noted that reduced fuel prices were a cushion on the inflation rate. He said the sustainability of the fuel price reduction would be a key factor in the determination of commodity prices and the public should remain hopeful of the difference between the rate of inflation and pricing.
Batswana should anticipate a positive aggregate growth of the economy due to a reduced appetite for Russian diamonds and an increased demand for Botswana diamonds.
