Botswana has entered recession as the economy shrinks due to the squeeze on revenue and production from the global economic crisis.

Figures released by the Central Statistics Office (CSO) this week show that at constant prices, GDP decreased by 20.3 percent from P6.17 billion in the first quarter of 2008 to P4.91 billion in the first quarter of 2009. Mining and quarrying industry contributed most to the decline with a 68 percent fall.

Most countries officially slid into recession a few months ago. But Botswana technically entered recession this week when the CSO released the first quarter national account data on Monday.

The data indicated that real GDP slipped from P6.723 billion in the third quarter of 2008 to P6.299 billion in the fourth quarter before further decreasing to P4.914 billion in the first quarter of 2009. This represents a 6.3 percent and a 22 percent fall in quarterly real GDP in the last two quarters.

Recession occurs when a country goes through two consecutive quarterly periods of negative growth. The CSO estimated GDP at current prices for the first quarter of 2009 was P18.225 million compared to the level of P23.771 million registered in the fourth quarter of 2008 ."At constant 1993-1994 prices, GDP decreased from P6.169 million in the first quarter of 2008 to P4.914 million in the first quarter of 2009, which is a 20.3 percent decline. Mining and quarrying industry contributed most to the decline at 68.6 percent.

"Water and electricity industry also recorded a decrease of 4.0 percent during the first quarter of 2009 compared with the first quarter of 2008.

The decrease was mainly due to a decrease in the consumption of electricity by the diamond industry. Other industries recorded increases," the CSO said.

Due to the crash in the diamond demand and consequent revenues, Botswana is now importing more than it is exporting leading to a trade deficit balance which has seen the country's foreign exchange reserves import cover fall from 30 months a year ago to around 20 months.

The CSO said that annual aggregate real GDP expenditure decreased by 29.9 percent in the first quarter of 2009 compared with the first quarter of 2008. The decrease was as a result of a slowdown in real inventory accumulation in particular, the decline in minerals.

In addition, real exports of goods and services decreased at a rate of 67.0 percent during the first quarter of 2009 compared with the first quarter of 2008. Real imports of goods and services decreased by 8.4 percent in the corresponding period.

"These declines are consistent with the decline in the mining industry," said the CSO report.

The International Monetary Fund (IMF) has projected that Botswana's economy will shrink this year with real GDP growth at -10.4 percent.

The IMF projections are based on the contraction of the mining sector, especially the diamond market which constitute a third of Botswana's GDP.

Botswana diamond giant, Debswana temporarily shut down its mine in April in a bid to conserve cash. The company will only produce about half of its usual output this year as demand for diamonds has been suppressed by the credit crunch.

In an effort to stimulate economic activity during these turbulent times, the government has decided to borrow from international lending agencies.

Already Botswana has accessed about US$1.5 billion from the African Development Bank.