Botswana's economy is projected to grow by 3% to 4% in 2025 following a contraction experienced in the previous year, according to a senior government official speaking at a budget workshop on Friday.
This recovery is attributed to expectations of a rebound in the global diamond market, a critical driver of the Southern African country's economy.
In the first three quarters of 2024, Botswana's economy contracted by 3.3%, prompting government officials to revise their expectations for the year's economic performance. The new data suggests the contraction will be more severe than the earlier forecast of 1.7% issued in December.
However, an updated estimate for the full-year contraction was not disclosed at the workshop, Reuters reports.
The anticipated recovery in 2025 is seen as vital for Botswana, whose economic health is closely tied to diamond exports, which account for a significant portion of its revenue and foreign exchange earnings. Analysts believe that a revitalisation of the global diamond market, along with efforts to diversify the economy, will play a crucial role in stabilising growth in the coming year.
“The domestic economy is anticipated to rebound in 2025 to a growth of 3-4%, reflecting a combination of base effects, the global recovery in the major diamond export markets and continued growth in the non-mining sector,” said director of macroeconomic policy in the finance ministry, Walter Matekane.
Botswana's economy heavily relies on diamond exports, but reduced revenue from the precious stone has constrained government spending.
Diamond sales remained sluggish throughout 2024, prompting Debswana, a partnership between Botswana and De Beers, to cut its production forecast for the year by approximately 6 million carats, bringing it down to 17.9 million carats.
Botswana anticipates a rebound in mineral revenues to reduce the budget deficit to 3.6% of GDP in 2025/26, down from the projected 6.75% of GDP for the 2024/25 fiscal year, according to a presentation by Matekane.
The country’s finance minister Ndaba Gaolathe is scheduled to present the 2025/26 national budget in February.