GABORONE, Mar 14 – S&P Global Ratings has downgraded the sovereign credit rating of Botswana, warning that prolonged weakness in the global diamond market could weigh heavily on the country’s economy.
The ratings agency lowered Botswana’s long-term foreign and local currency sovereign credit ratings to BBB- from BBB, while its short-term ratings were reduced to A-3 from A-2. The agency maintained a negative outlook.
According to S&P, the downgrade reflects mounting pressure on Botswana’s diamond-dependent economy as global demand weakens and structural shifts reshape the industry.
Botswana is the world’s second-largest producer of natural rough diamonds, and the sector has historically accounted for roughly 70% of the country’s exports and about one-third of government revenue.
However, the industry now faces significant competition from synthetic diamonds as well as weaker demand from key markets such as China.
Lab-grown diamonds have rapidly gained market share, accounting for around 20% of the global diamond market by value and up to 50% by volume in the United States engagement ring segment.
Natural diamond demand has also been affected by factors including U.S. tariffs, changing consumer preferences toward gold jewellery and a broader slowdown in luxury spending.
Production has already begun to decline. Debswana, the country’s largest diamond mining operator, reduced output at several mines in 2025 and temporarily shut down others as market conditions weakened.
The downturn, which began in the second half of 2023, led to a 27% drop in production to 17.9 million carats in 2024. Output declined further to 15.1 million carats in 2025.
Debswana expects to maintain production at around 15 million carats in 2026, roughly 40% below its 2023 output levels, with only modest increases anticipated in the following years.
S&P forecasts that Botswana’s economy will grow by about 2.5% in 2026 after contracting by 2.8% in 2024 and 0.4% in 2025.
The country’s fiscal position is also expected to remain under pressure, with the deficit projected to reach 8.9% of gross domestic product in the 2026–2027 fiscal year, only slightly improved from 9.3% the previous year.
Without stronger global demand for natural diamonds or significant policy adjustments, the agency warned that Botswana could continue to face elevated fiscal deficits and rising debt pressures in the coming years.
