Botswana’s GDP contracted by 5.3% in Q1 this year, reversing the 1.9% growth registered in Q4 2023.

This is according to the latest data from Statistics Botswana.

This downturn was mainly caused by a steep drop in the real value added in diamond trading and the mining and quarrying industries, which decreased by 46.8% and 24.8% respectively.

The mining sector, the cornerstone of Botswana's economy, faced substantial challenges, The Voice reports.

The real value added in mining and quarrying shrank by 24.8%, with significant declines in the real value added of gold, diamonds, and coal by a respective 71.0%, 26.2%, and 19.5%. Diamond production was especially hard hit, dropping by 27.3% in carats during the first quarter of 2024.

Indeed, production fell by 1,912 carats, down from 6,989 carats in Q1 2023 to 5,076 carats during the period under review.

Looking quarter-on-quarter, there has been an 18.7% decline, with production falling by 1,164 thousand carats from 6,241 thousand carats in Q4 last year.

Furthermore, diamond revenues typically constitute a significant part of the country’s budget income, and the recent drop is anticipated to hinder the government’s ability to achieve its fiscal targets for the year. 

The central bank has already warned that the economic growth forecast of 4.2% is jeopardised due to diminished mining output.

The global diamond industry experienced a significant slowdown in the latter half of last year, prompting major miners like De Beers and Russia's Alrosa PJSC to substantially cut supplies in an effort to counter falling diamond prices.

This strategic move significantly affected earnings at De Beers, a major player that mines a large portion of its diamonds in Botswana.

Anticipating a slow and gradual recovery in the diamond market, De Beers voiced concerns about persistent weakness in key markets such as China and the US, further complicating the industry's recovery efforts.