Botswana’s economy is projected to shrink by 1.7% this year, marking the first contraction since the COVID-19 pandemic, Finance Minister Ndaba Gaolathe announced. The downturn is primarily attributed to a prolonged slump in the global diamond market, which has weakened demand for the country’s key export.
Earlier this year, the government had forecast a 4.2% growth for 2024, but continued weakness in diamond sales, especially since late last year, has severely impacted the economy. Botswana’s diamond output is expected to fall by about 6 million carats, with the joint venture Debswana, in partnership with De Beers, revising its 2024 production target to 17.9 million carats. De Beers reported a 40% drop in diamond sales during the first three quarters of 2024.
Gaolathe further warned that the economic contraction could surpass the 1.7% estimate if additional risks materialize. These include potential further disruptions in the diamond market, the effects of a severe regional drought, and operational issues at a major power plant.
The government’s budget deficit is now projected to reach 6.75% of GDP, a significant increase from the earlier forecast of 2.8%. Botswana, like its southern African neighbors, has been hit by a decades-long drought, which has contributed to economic struggles in countries such as Namibia and Zimbabwe.
Although Botswana’s central bank has confirmed an economic contraction in 2024, it refrained from specifying the extent.
