The recently released Business Expectations Survey (BES) by the Bank of Botswana noted that expectations had remained the same as in the first quarter, with businesses expecting a downward movement of the economy beyond Q3. “Firms were optimistic about business conditions in the second quarter of 2025, largely unchanged compared to the first quarter of 2025,” researchers stated in the report. However, it added that the medium-term outlook has cooled, reflecting “increased uncertainty resulting from Botswana’s weaker fiscal position”. Analysts say the combination of limited fiscal space and external shocks is prompting firms to revise expectations downward. The BES is carried out every quarter and gathers the sentiments of 100 businesses from 13 major economic sectors. Overall, firms expected business conditions to remain positive and supportive of economic activity in the second quarter and were largely unchanged compared to the previous quarter.
However, expectations for the third quarter of 2025 were neutral. "Furthermore, firms were less optimistic about business conditions in the 12-month period to June 2026,” the survey stated. “This cautious outlook is likely to be linked to the Country’s weaker fiscal position, characterised by lower revenues, constrained cash flow and, therefore, restrained pace of spending, mainly due to a drop in diamond export earnings." Inflation forecasts remained stable, but there were warnings of upward pressure. The BES projects that inflation will average 3.4 percent in 2025 and 4.1 percent in 2026 “Inflation expectations remain well anchored within the 3–6 percent range for 2025 and 2026,” researchers noted. However, the researchers also warned against the impact of the recent exchange rate adjustments that could result in unintended price pressures, given Botswana’s high import dependence. Observers note that import-linked inflation is likely to affect key sectors, including manufacturing and retail. While short-term confidence is steady, firms remain wary of the medium-term outlook, citing uncertainty around fiscal policy and global economic conditions.
