Botswana’s economy contracted by 1.7% this year due to prolonged downturn diamond sales

Botswana’s Finance Minister Ndaba Gaolathe, who is also the Vice President, warned lawmakers that the economy was exposed to further challenges which could deepen what would be its worst downturn since the coronavirus pandemic in 2020, reports mining.com.

“These include risks such as further disruptions in the diamond market, extreme weather conditions including droughts, floods, cyclones and persistent defects in our major power plant,” he said.

The economy, which in February was projected to grow by 4.2% this year from 2.7% in 2023, is expected to rebound next year and move toward a 4%-to-5% growth pace, Gaolathe said.

“This is in line with anticipated global recovery, particularly in the major markets for diamonds, and continued positive growth in the non-mining sector,” he said.

Botswana’s economy is anchored by mining, particularly diamonds, which also account for about a third of budget revenues and the bulk of foreign currency earnings.

The finance minister also announced a range of cost cutting measures, which follow projections earlier this week that the budget deficit for the current fiscal year could more than double initial forecasts to 6.7% of gross domestic product.