Botswana Eyes Economic Rebound as Diamond Market Shows Signs of Recovery

Botswana’s economy, heavily reliant on diamond exports, is poised for a rebound in 2025, with growth projected to reach between 3% and 4%, according to a senior government official. This optimistic outlook follows a challenging 2024, during which the economy contracted significantly due to a slump in diamond sales.

“The domestic economy is anticipated to rebound in 2025,” stated Walter Matekane, Director of Macroeconomic Policy at the Ministry of Finance, at a recent budget workshop. “This growth will be driven by a combination of factors, including a recovery in the global diamond market and continued expansion in the non-mining sectors.”

The 2024 economic performance fell short of initial expectations. While a contraction of 1.7% was initially forecast, the actual figures revealed a more significant decline in the first three quarters of the year.

The diamond industry, the cornerstone of Botswana’s economy, faced significant headwinds in 2024. Debswana, the 50/50 joint venture between the Botswana government and De Beers, was forced to lower its production guidance for the year by a substantial margin, impacting government revenue streams.

However, with signs of a recovery in global diamond markets emerging, the government anticipates a resurgence in mineral revenues. This positive outlook is expected to narrow the budget deficit from a projected 6.75% of GDP in the current fiscal year to 3.6% in 2025/26.

The upcoming national budget, scheduled for delivery by Finance Minister Ndaba Gaolathe in February, will provide further details on the government’s plans to navigate the economic challenges and capitalize on the anticipated recovery.

The 2025 growth projection hinges on several factors, including a sustained recovery in the global diamond market, continued growth in the non-mining sectors, and effective government policy interventions.

While the outlook for 2025 is cautiously optimistic, the government remains mindful of potential risks, including global economic uncertainties, geopolitical instability, and potential fluctuations in diamond prices.

The government’s focus will be on implementing policies that foster economic diversification, strengthen domestic industries, and ensure sustainable and inclusive growth for all citizens.

By: Loyce Zemeyi