The African Development Bank (AfDB) is bullish that Botswana’s economy will grow by 4 percent in 2025, rebounding from a contraction of 1.7 percent in 2024.ย
According to the AfDBโs 2025ย Macroeconomic Performance and Outlookย (MEO) report, โAn upturn in diamond sales and increased public investment in infrastructure will, however, aid economic recovery, with real GDP growth projected to increase to 4.0 percent in 2025 and 4.5 percent in 2026.โ
The AfDBโs projected growth of 4.0 percent is higher than the Botswana governmentโs expectation of 3.3 percent growth in 2025. Botswana is the only country in Southern Africa expected to experience an economic contraction in 2024, with a decline of 1.7 percent due to a prolonged downturn in the global diamond market. The countryโs heavy reliance on diamonds, which contribute significantly to its export earnings, has left the economy vulnerable to global market fluctuations. However, the governmentโs strategic focus on infrastructure development is expected to stimulate domestic demand and create jobs, supporting overall economic growth.
The AfDBโs report presents a cautiously optimistic forecast for Botswana’s economy in the coming years. It projects that Botswanaโs real GDP will grow by an average of 4.5 percent over 2025 and 2026, with inflation maintained at a stable 3.5 percent. However, challenges persist, as the account balance and fiscal balance are expected to register deficits of 4.2 percent and 4.1 percent of GDP, respectively.
In the AfDBโs performance rankings, Botswana received a ‘green’ rating for its inflation control, indicating strong performance in maintaining price stability. Conversely, the nation was assigned a ‘yellow’ rating for real GDP growth, account balance, and fiscal balance, suggesting moderate performance in these areas.
These projections align with recent statements from Botswana’s Finance Minister, Ndaba Gaolathe, who, in his February 2025 budget speech, anticipated a 3.3 percent economic growth for 2025. This expected rebound follows a 3.1 percent contraction in 2024, attributed to a downturn in the global diamond market. The anticipated recovery is linked to an upswing in diamond sales and optimism in non-diamond mining sectors.
In Southern Africa, real GDP growth is projected to increase from an estimated 1.8 percent in 2024 to 3.0 percent in 2025 and 3.1 percent in 2026. The AfDB notes that this growth rebound marks the first time since 2021 that the regionโs growth has exceeded 2 percent. This improvement can be attributed to the projected robust performance in Eswatini, Zambia, and Zimbabwe, where growth is expected to reach 5 percent or more, marking a recovery from the adverse impact of a severe drought in 2024.
โExcept for South Africa, Namibia, and Lesotho, economies in the region are projected to post growth of 3โ4 percent in 2025,โ the AfDB says. At the continental level, the AfDB highlights noticeable growth decreases exceeding 4.0 percentage points in 2024 compared to 2023 in South Sudan (29.0 percentage points), Libya (12.2 percentage points), Botswana (4.4 percentage points), and Zambia (4.1 percentage points). These declines stem from lower exports of oil and diamonds, as well as the effects of drought on agriculture and manufacturing.
โThe outlook is, however, encouraging, with Africaโs average real GDP growth projected to increase by 0.9 percentage point to 4.1 percent in 2025 as the efficacy of policies deployed to respond to such shocks improves. Africaโs projected growth for 2025 will be 0.9 percentage point higher than the global average,โ the AfDB says. This continental growth is driven by economic reforms, declining inflation, and improved fiscal and debt positions. Despite these gains, the report notes that Africa’s growth remains below the 7 percent threshold necessary for substantial poverty reduction.
