Botswana Braces for Near-Zero Economic Growth in 2025 Amid Diamond Sector Slump

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Botswana is poised to significantly downgrade its 2025 economic growth forecast—potentially to near zero per cent—due to persistent weakness in the global diamond market. This stark revision was disclosed by a senior Ministry of Finance official during a parliamentary audit committee meeting on Monday, marking a sharp departure from earlier hopes of economic recovery.

As the world’s top diamond producer by value, Botswana’s economic health is deeply intertwined with global diamond demand. Diamond exports traditionally account for about 30% of government revenue and roughly 75% of foreign exchange earnings. However, a prolonged slump in international demand has severely impacted these revenue streams, casting doubt on the country’s fiscal outlook.

In February, Finance Minister Ndaba Gaolathe projected a 3.3% growth rate for 2025, hinting at a rebound in diamond sales. The national budget anticipated a fiscal deficit of 7.56% of GDP—an improvement from the previous year’s estimated 9% shortfall. But Permanent Secretary Tshokologo Alex Kganetsano has since acknowledged that those projections are no longer tenable given current market conditions.

“Since February, circumstances have changed, and we will revise the growth outlook downward,” Kganetsano told Parliament, adding that internal estimates now suggest growth could fall to “close to zero per cent.” Though still preliminary, the figure highlights the severity of Botswana’s deteriorating economic situation, driven largely by the faltering diamond trade.

Adding to the concern, the International Monetary Fund (IMF) forecasts a 0.4% contraction in Botswana’s economy in 2025, following a 3% decline in 2024. Initial government expectations that mineral revenues would more than double in 2025 now appear overly optimistic.

“The trend continues to worsen rather than improve,” Kganetsano warned, revealing that a growing fiscal deficit has led to unpaid invoices for government contractors. This liquidity crunch is straining the country’s financial operations and raising alarms about the short- to medium-term solvency of public institutions.

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As Botswana confronts this economic reckoning, there is mounting pressure on policymakers to accelerate diversification and strengthen resilience against the volatility of global commodity markets. Once a pillar of national prosperity, the diamond industry now represents a pressing vulnerability in Botswana’s economic landscape.