World Bank predicts rebound for Botswana’s economy in 2026
Lewanika Timothy | Monday January 26, 2026 06:00
The growth projections follow a three percent decline in economic activity in 2024, which is likely to be followed by another 0.9 percent contraction, according to Finance ministry figures.
The World Bank’s latest Global Economic Prospects report, published recently, showed that despite headwinds, researchers see the local economy making its way back to positive output with growth for 2026 now seen at 2.3 percent, which would mark a rebound in positive activity for an economy that has been severely hit by low mineral revenues and eroded fiscal buffers.
World Bank researchers said growth in sub-Saharan Africa is projected to firm to 4.3 percent in 2026 and 4.7 percent in 2027, supported by stronger investment and exports. The pickup, however, is predicated on the external environment not deteriorating further and on substantial improvements in security in several countries in fragile and conflict-affected situations.
“This projected growth remains below the region's long-term average and is insufficient to make substantial progress in reducing extreme poverty,” the World Bank said. “The sharp scaling back of Official Development Assistance since 2024 has further constrained fiscal space and will undermine the resilience of sub-Saharan economies to adverse shocks.”
Researchers said that whilst the direct exposure of most sub-Saharan economies to global trade fragmentation remained limited, there were notable exceptions, such as Côte d’Ivoire, Kenya, Lesotho, Madagascar, Mauritius, and South Africa, which were heavily reliant on US markets for their goods and commodity exports.
The US, the world’s biggest market for diamonds, is applying a 15% tariff on imports from Botswana, down from a planned 37%. The Budget Strategy Paper released by the Finance ministry this week noted that whilst direct diamond exports by Botswana to the US accounted for just 2.5 percent of that country’s imports of diamonds, indirect stones sourced in Botswana were significant.
“The largest diamond exports to the USA are from India (41.4%), followed by Israel (29.6%) and Belgium (10.8%). “Despite the smaller share of US imports of diamonds from Botswana, the share of Botswana’s diamonds to the US through other routes from these countries is large. “The introduction of the new United States tariff regime on diamonds is a source of concern, particularly in the context of a prolonged period of weakness in the global diamond market,” the ministry said.
In a recent report, the IMF advised Botswana to focus on restraining spending whilst opening more avenues for revenue in order restore fiscal sustainability.
Proposed measures include reducing the wage bill and slowing down funding to loss-making state-owned entities.