Botswana’s Economic Outlook

By Brian Benza and Sfundo Parakozov

GABORONE (Reuters) – Botswana’s economy is forecast to grow 3.3% this year after a contraction in 2024, driven by an expected recovery in the global diamond market, according to its finance minister. This outlook also highlights the need for diversifying the economy beyond precious stones.

Botswana is the world’s leading diamond producer by value, making its economy heavily reliant on diamond exports. The decline in diamond earnings has restricted government spending.

Recovery Expectations
Finance Minister Ndaba Gaolathe indicated that the growth expectation is based on the anticipated recovery of the diamond industry in the latter part of 2025, alongside continued optimism in non-diamond mining sectors, during a recent budget speech.

Last year, Botswana’s economy reportedly contracted by 3.1%, a decline larger than the 1.7% reduction initially predicted by the government in December.

Economic Diversification Plans
Gaolathe supported the sentiments of President Duma Boko, who has promised to diversify the economy since taking office in November after a significant electoral victory. Gaolathe mentioned, “Botswana’s reliance on diamond revenues has been both a strength and a vulnerability.”

The government aims to expand sectors such as tourism, agriculture, manufacturing, and energy.

In further developments, Botswana and diamond giant De Beers have finalized a rough diamond sales agreement and extended mining licenses for their joint venture Debswana until 2054.

Gaolathe projected that the budget deficit for the 2025/26 fiscal year, covering the period from April to March, would decrease to 7.56% of GDP, down from the current year’s anticipated 9% deficit.