Botswana’s economy is projected to grow by 3.3% in 2025, following a contraction in 2024, thanks to an expected recovery in the global diamond market. The country, which is the world’s leading producer of diamonds by value, has faced economic challenges due to declining diamond revenues.
Finance Minister Ndaba Gaolathe announced the forecast during his budget speech, emphasizing the need for economic diversification to reduce dependence on precious stones.
Economic Recovery and Growth Outlook
Botswana’s economy shrank by 3.1% in 2024, a deeper decline than the 1.7% contraction the government had previously predicted in December. However, with a stronger diamond market expected in the second half of 2025 and continued growth in non-diamond mining sectors, the outlook for the coming year is more positive.
“This growth outlook is premised on the recovery of the diamond industry and continued positive sentiment in the non-diamond mining sectors,” Gaolathe stated.
Diversification Beyond Diamonds
Botswana’s heavy reliance on diamond revenues has long been a double-edged sword—providing substantial income but also making the economy vulnerable to fluctuations in global demand.
President Duma Boko, who took office in November after a landslide election victory, has prioritized economic diversification. His administration plans to expand key industries, including:
• Tourism – Boosting Botswana’s natural attractions to attract more visitors.
• Agriculture – Strengthening food production and exports.
• Manufacturing – Encouraging local production to reduce import reliance.
• Energy – Investing in renewable and alternative energy sources.
New Diamond Agreement with De Beers
In a major development, Botswana and diamond giant De Beers finalized a new rough diamond sales agreement and extended their Debswana joint venture mining licenses until 2054. This long-term deal is expected to stabilize the diamond sector and provide a foundation for sustained growth.
Budget Deficit Expected to Shrink
The country’s budget deficit for the 2025/26 financial year (April to March) is projected to drop to 7.56% of GDP, down from 9% in the current financial year. This reflects efforts to manage government spending while supporting economic recovery.
Looking Ahead
With a rebounding diamond market and a renewed focus on economic diversification, Botswana is positioning itself for sustained growth in the coming years. However, successful policy implementation and global market stability will be crucial in ensuring long-term economic resilience.
