has led to a rebound of economic activity, particularly in the third quarter, compared to the first half of the year, when there was no diamond production. in addition to the beneficial effect of the on - going recovery of the world economy, government spending and the easing of monetary policy contributed to a strong expansion of the non - mining sector, which enabled the overall economy to grow by 1. 3 percent in the third quarter of this year. this suggests that the underlying trend in economic activity remains positive, partly because the government was able to implement a fiscal stimulus by drawing on the savings that were accumulated when revenues were buoyant. as a result of the world economic upturn, diamond production has resumed in response to a steady revival of overseas demand for rough diamonds ; and it is expected that this trend will continue in the second half of the year. the resumption of diamond exports has also led to surpluses in the current account of the balance of payments in recent months, so much so that the foreign exchange reserves are now increasing after months of consistent decline. as intimated earlier, the bank of botswana lent support to the domestic economic recovery by easing monetary policy. to this end, the bank rate was reduced from 15. 5 percent in december 2008 to the current level of 11 percent. it is important to emphasise that the bank remains vigilant in monitoring inflation trends, to ensure that the medium term inflation objective of 3 – 6 percent is adhered to, despite some transient spikes in prices, which pushed inflation to 7 percent in september. after all it is the bank ’ s policy to stabilise inflation at a low and sustainable level in order to promote long - term economic growth and diversification. needless to add, the world economy remains fragile. for a strong rebound in economic activity to be sustained, there is need to learn from the current crisis and to take corrective measures, if we are to avoid a recurrence of the recent economic and financial turmoil. at a global level, there is discussion of the need to create a new economic order. towards this end, the g20 is no longer an obscure talking shop for finance ministers and central bank governors of advanced economies. although there is practically no developing country participation, we should take comfort from the fact that it has now been transformed into a serious forum for world leaders to take collective global decisions. it is also expected to assume the responsibility for policy coordination, a role that has, until now, been played by

or t & au r an t s m un an d ba rs w at er ns tru ct io n & co el ec tri cit y tr ad e, re st - 100. 0 m m in an in g uf ac tu rin g - 50. 0 ag r icu ltu re 0. 0 source : commercial banks. 3. 21 for households, annual credit growth accelerated from 4. 5 percent in 2022 to 5 percent in 2023. the higher credit growth was mainly attributable to a higher rate of increase in property and motor vehicles loans. conversely, annual growth fell with respect to personal unsecured and credit card - based loans. thus, the share of mortgages in total household credit increased from 26. 8 percent in december 2022 to 27. 6 percent in december 2023, while that for motor vehicles increased from 4 percent to 4. 3 percent in the same period. meanwhile, the share of credit card exposures in total household credit was unchanged at 1. 5 percent in the same period. overall, it is assessed that modest increase in lending to households reflects the impact of the 2022 policy tightening on credit demand as borrowing became more costly, as well as restricted supply of loan facilities by banks to guard against possible defaults, therefore, a balanced response to market conditions. 3. 22 in general, credit growth continues to be supportive of economic activity although the amount of credit relative to the size of the economy remains comparatively low by global standards. commercial bank credit to gdp ratio increased slightly ( table 3. 2 ) in 2023 reflecting faster credit growth relative to output growth but remains monetary policy statement february 2024 comparatively low relative to financial inclusion and development needs, as well as global trends ( appendix, table a2 ). in this context, there continues to be scope for prudent credit extension to enhance support for economic activity. the assessment of vulnerabilities and risks to financial stability, as measured by the credit - to - gdp gap ( chart 3. 10 ), also shows that the modest rate of credit growth is commensurate with the rate of increase in gdp ; hence signifying that the current level of credit relative to economic activity is sustainable and poses limited risk. table 3. 2 : commercial bank credit - to - gdp ratio percent of gdp total commercial bank credit business parastatals agriculture mining manufacturing construction trade transport and communications finance and business services real estate households retail credit3 mortgage 38.