KEY POINTS
- Botswana projects 3-4 percent in 2025, aided by the global diamond market and a stronger non-mining sector.
- The 2024 economic contraction of 3.3 percent highlights dependence on diamond exports.
- Fiscal policy targets a 3.6 percent GDP deficit in 2025, emphasizing economic diversification and long-term resilience.
Botswana’s economy is expected to rebound with 3-4 percent growth in 2025, driven by a recovery in global diamond markets and sustained progress in non-mining sectors, according to the latest government projections.
This comes after the country faced a significant contraction in 2024, marking a stark reminder of its reliance on diamond exports in a volatile global market.
Economic downturn in 2024 highlights vulnerabilities
The southern African nation’s economy contracted by 3.3 percent in the first three quarters of 2024, significantly surpassing earlier forecasts of a 1.7 percent decline. The sharp downturn underscores Botswana’s vulnerability to external pressures, particularly in the diamond market, a key export sector that has been sluggish throughout the year.
Walter Matekane, Director of Macroeconomic Policy at Botswana’s Finance Ministry, pointed to the global recovery in diamond demand and ongoing growth in the non-mining sectors as the primary drivers for the 2025 economic rebound.
“We expect the economy to recover to 3-4 percent growth in 2025, benefiting from base effects, stronger diamond export markets, and continued non-mining sector expansion,” Matekane stated at a recent budget workshop.
Diamond dependency and economic diversification in focus
Botswana’s reliance on diamond exports makes it vulnerable to global market shifts. Weak 2024 sales led Debswana, a joint venture with De Beers, to cut its production forecast by 6 million carats to 17.9 million, underscoring the need for economic diversification.
To address these challenges, the government has set its sights on reducing the fiscal deficit to 3.6 percent of GDP in the 2025/26 fiscal year, a significant improvement from the projected 6.75 percent for 2024/25. As reported by MiningWeekly, this deficit reduction is part of a broader strategy to stabilize the economy while pursuing diversification efforts beyond the diamond sector.
Fiscal policies and economic growth
Finance Minister Ndaba Gaolathe’s February 2025 budget will outline a fiscal strategy aimed at driving economic recovery and tackling long-term structural challenges, setting the stage for a more diversified, resilient economy.
As Botswana seeks to capitalize on a recovering diamond market, the emphasis on diversifying its economy remains critical to reducing dependency on a single commodity and achieving balanced, sustainable growth.
