When the world runs out of diamonds

For the continent's diamond producers, still dependent on Western markets for over 50% of final retail demand, the outlook has been less certain.

Although sales have recovered from the lows of the crisis, there is little reassurance on the sustainability of demand. The diamond pipeline remains notoriously dependent on the availability of financing, but it is unclear whether an improvement in financing(perhaps subject to new reversals in the short term) or a more sustained turnaround in underlying demand has driven the recent pick-up in sales. Last year, Botswana's economy experienced one of the most severe economic contractions in Africa, declining by 6%. Given the weak base, a rebound in 2010 - with diamond exports having resumed - is a given.  But with the country in its second consecutive year of a double-digit fiscal deficit, having already had its prized single-A rating downgraded by S&P, it is not just the near-term outlook that matters.