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The local economy is projected to further decelerate this year, the International Monetary Fund announced recently.
The projection comes after the IMF team led by Luc Eyraud, Division Chief in the IMF African Department and Mission Chief for Botswana, visited the country and held economic discussions from July 2 to12, 2024.
“Looking ahead, the economy is expected to decelerate further this year, with growth projected at one percent. The continued slowdown is mainly due to a fall in diamond production, partly offset by construction projects financed by the fiscal expansion.
“In the medium term, growth is expected to converge towards four percent, as diamond mining recovers,” said Eyraud.
The development comes on the backdrop of Botswana’s economic growth decelerating from 5.5 percent in 2022 to 2.7 percent in 2023, below the long-run potential growth of four percent.
The IMF said a sharp decline in diamond trading and mining activities was the main contributor to the slowdown, as global demand for rough diamonds decreased.
However, despite the weak diamond market, the external position improved last year because of strong customs union revenues.
Meanwhile, the IMF said the country’s fiscal deficit is projected to widen further to six percent of GDP in 2024, reflecting a further decline in mineral revenues and higher capital expenditure.
