Botswana’s Growth Stumbles as Global Market Falters

Botswana’s economic engine may be sputtering. The country’s ambitious target of 4.2% growth this year is in jeopardy, according to a senior central bank official, Innocent Molalapata. “From what we’ve seen so far,” Molalapata told an economic briefing, “unfavorable global conditions coupled with domestic hurdles are making it unlikely we’ll reach that goal.”

The forecast throws a bucket of cold water on Finance Minister Peggy Serame’s February budget speech, where she predicted a surge in growth fueled by a resurgent diamond sector. Diamonds are the lifeblood of Botswana’s economy, but the global market for the precious stones appears to be suffering from a persistent case of the chills. Debswana Diamond Company, a powerhouse joint venture between the government and De Beers, witnessed a staggering 48% year-on-year plunge in sales during the first quarter of 2024.

“The mining sector, which is heavily reliant on diamonds, contracted by a worrying 27% in the first quarter,” revealed Molalapata. This data paints a grim picture, suggesting a significant downward revision of the growth target might be necessary. The Bank of Botswana, unlike the Ministry of Finance, traditionally avoids issuing specific GDP growth forecasts.

The International Monetary Fund seems to share the central bank’s cautious optimism, projecting a more modest growth of 3.6% for Botswana in 2024. The country now faces a critical juncture, needing to navigate a tricky path between sluggish global markets and domestic structural constraints to reignite its economic engine.