The continuing downturn in diamond exports widened the merchandise trade deficit in October to P5.6 billion, the worst since June 2020, as diamond exports fell by about 50%.
Figures released late last month by Statistics Botswana also indicate that the September deficit of P3.9 billion was revised deeper to P4.5 billion. Both the September and the October deficits are the first recorded in 2023 and are directly linked to a crash in diamond exports seen in the second half of the year.
According to Statistics Botswana data, diamond exports have slowed from a peak of P7.3 billion in March, to October’s low of P1.3 billion.
Diamond sales are under pressure this year from global economic weaknesses, a softer than forecast rebound in China and industry reputational concerns amongst consumers due to Russia/Ukraine conflict.
The strong demand of 2021 and 2022 has met these factors and resulted in a glut or oversupply in the market at retail level.
The merchandise trade deficit, or the relationship between the country’s exports and imports of goods, was at a surplus of P1.6 billion at the end of the third quarter. However, after October’s figures, the trade balance for the year has sunk to a deficit of P4.1 billion.
Economists associate prolonged trade deficits with depletion of countries’ foreign reserves, weakening of currencies and stronger need for external debt.
