In their latest economic review, economists at Econsult forecast that gross domestic product growth for the year will fall within a range of -1% to 0%, meaning either a marginal contraction or, at best, stagnant output. While this would represent an improvement from the sharper three percent contraction recorded in 2024, the consultancy outfit cautions that underlying economic conditions remain fragile and that the road ahead will be challenging. “The next few months are likely to be bumpy for the Botswana economy, with a continuation of recent stresses, as well as new ones such as the expected jump in inflation due to recent exchange rate changes,” the researchers said. The performance of the diamond industry, which accounts for a significant share of government revenues and export earnings, remains central to the country’s outlook. Econsult notes that there is still a great deal of uncertainty in the sector, with what it describes as tension between short-term commercial needs and long-term strategic goals. Industry players are pursuing commitments to intensify marketing of natural diamonds as a luxury commodity in a bid to defend their position in a competitive global jewellery market.
At the same time, there are proposals to liquidate slow-moving inventory, presumably by lowering prices, to improve cash flow. Such measures could help in the short term but may also impact longer-term pricing power and revenues. Econsult points out that Botswana’s broader fiscal and liquidity pressures, which have weighed on the economy in recent months, may be eased to some extent by the anticipated drawdown of external loans that appear close to finalisation. However, the economists have stressed that this would only provide temporary relief and that the government will still face the urgent task of stabilising the budget and narrowing the fiscal deficit. The economists have suggested that cutting public expenditure will be necessary in the near term to avoid deepening debt risks.
