World Bank nudges up forecast, but flags threats
Mbongeni Mguni | Tuesday August 4, 2026 11:42
The World Bank had originally forecast growth of 2.3 percent in January when it launched its Global Economic Prospects report. That estimate was revised to 2.7 percent at the launch of the Africa Economic Update in April.
Recently, when launching a new report on the country’s economic trajectory, World Bank researchers revised their estimates for 2026 growth to 3.2 percent, but flagged a number of existing and emerging threats to the structure of the economy.
Much of the latest forecast is underpinned by the significant rebound in diamond production, where production at Debswana came in 43 percent higher in the first half of the year, when compared to the same period last year.
“Botswana remains highly exposed to global commodity and geopolitical shocks, particularly risks to oil prices and the diamond market,” World Bank researchers said in the report. “A weaker-than-expected recovery in global diamond demand or further loss of market share would weigh heavily on growth, exports, and fiscal revenues. “At the same time, limited fiscal financing space amplifies vulnerability to shocks. “Delays or slippages in fiscal adjustment, or policy responses that shift external cost pressures onto the budget, could worsen debt dynamics and force disruptive expenditure compression during budget execution.”
Growth in the non-mining economy, which is tied to government expenditure, is expected to remain constrained this year and into the medium term, given the ongoing fiscal constraints and limits for further debt expansion faced by authorities.
“Momentum in the non-mining economy is likely to remain subdued, constrained by the required fiscal adjustment and weak private investment in a still challenging business environment,” the researchers said.
Over the medium-term, the World Bank expects growth to average around three percent, reflecting gradual improvements in the policy environment and the maturing of investment in renewable energy and base-metal mining that will contribute to boosting economic activity.
“However, growth at this pace would be insufficient to significantly reduce poverty or unemployment,” the Bank said.
Researchers repeated concerns around the slow pace of structural transformation in the country, noting that economic growth has been slowing down over the past two decades, from an average of over six percent in the 1990s to 2.3 percent during 2015–24 and a contraction in the last two years. They noted that while the country achieved a substantial reduction in poverty rates in the 1990s and early 2000s, poverty reduction has stalled since around 2009.
“Inequality remains among the highest in the world, and the unemployment rate has consistently remained above 20 percent. “These trends point to structural constraints beyond the current diamond shock and underscore the need to shift the country’s economic model away from single-commodity dependence toward a more diversified, private sector-led, job-creating economy,” the World Bank said.
The latest World Bank report, entitled “Seizing the Moment: How Botswana Can Turn Crisis into Opportunity” was developed in consultation with government and pinpoints the measures the country needs to take to shake off the current economic slump and pivot towards sustainable growth.
The research proposes that reforms need to focus on sound and sustainable fiscal management, a competitive and innovative private sector, prudent stewardship of natural capital alongside climate resilience, as well as investment in human capital.
Responding briefly to the findings recently, the secretary for Macroeconomic and Financial Policy in the Finance Ministry, Sayed Timuno, said the report confirmed government’s bearings, rather than indicating a change of course.
He said while the destination of a True North had not changed, the terrain to be travelled in getting there had become more difficult. Government’s True North vision targets a high-income, digitally-enabled, export-driven and economically diversified country by 2036 where every citizen is employed, empowered and fulfilled.
“The terrain is literally rougher than any point in recent memory,” he said at the report’s launch. “So the value of this report really lies precisely in its confirmation that the course government sets remains the correct one, even if the conditions around us have deteriorated. “We have witnessed and travelled downturns before. “What this report establishes and what government's own analysis confirms is that the present episode differs from its predecessor in kind and not merely in degree.”
He said government was focussed on eliminating delay in the reforms required, noting that tighter financing conditions and narrower fiscal space were pulling back the horizon needed for structural transformation.