Botswana’s economic prospects for 2025 appear gloomy, with global research firm Business Monitor International (BMI) warning that the challenges facing the economy are far from over. The caution follows a sharp contraction in the final quarter of 2024, largely driven by a steep decline in the mining and quarrying sector.
Data released by Statistics Botswana on April 2 showed that real GDP shrank by 2 percent year-on-year in Q4 2024.
“While this was in line with our expectations of an economic contraction, driven by persistent headwinds in the global diamond market, we note that the non-mining economy performed better than anticipated,” BMI said.
The Q4 data brought Botswana’s full-year economic performance to a 3 percent contraction—slightly better than BMI’s earlier estimate of a 4.6 percent decline.
Still, BMI warned that the magnitude of the Q4 slump indicates that economic pressures have yet to ease.
“The poor growth outturn was driven by a 27.3 percent year-on-year contraction in the mining and quarrying sector, which accounts for about 20 percent of GDP,” analysts noted.
The firm said headwinds in the global diamond market that hampered growth in 2024 are expected to continue into 2025. “Mining dependence is unlikely to reduce significantly next year,” BMI added.
According to the research firm, the Q4 contraction—alongside recent diamond price data from Statistics Botswana—suggests that the sector’s weakness will weigh on growth this year as well.
“This supports our view that the economic recovery in 2025 will be modest, especially when compared to the severity of the 2024 contraction. Accordingly, we maintain our 2025 growth forecast at 3.8 percent, below the 2010–2019 average of 5.7 percent,” BMI said.
BMI also expects the new administration under President Duma Boko to prioritise investment in non-mining sectors, which continued to show promise despite the mining collapse.
“Indeed, finance, IT, and accommodation and food services—all key to the government’s diversification strategy—posted strong growth in both Q3 and Q4 of 2024,” the firm observed.
However, analysts warned that risks to their 2025 growth forecast are tilted to the downside.
“A weaker-than-expected recovery in diamond demand could further drag on economic activity, hurting government revenues and Botswana’s external accounts,” BMI concluded.
