GABORONE, Mar 31 – Botswana’s economy contracted by 5.4% year-on-year in the fourth quarter of 2025, reflecting a sharp downturn in its mining sector, according to data from Statistics Botswana.
Mining and quarrying, a cornerstone of the economy, recorded a steep 47% decline in value added during the period, driving the broader contraction. The slowdown also spilled into other sectors, including construction, as well as water and electricity, which all posted declines.
The data underscores the impact of a prolonged slump in the global diamond market, which has weighed heavily on Botswana’s export earnings. Weak demand, driven by global economic uncertainty and the growing popularity of lab-grown diamonds, has intensified pressure on the sector.
On an annual basis, the economy shrank by 0.7% in 2025, following a deeper contraction of 2.8% in 2024, highlighting sustained economic strain.
Diamonds remain central to Botswana’s fiscal and external position, typically accounting for about one-third of government revenue and roughly three-quarters of foreign exchange inflows. As a result, fluctuations in global demand continue to have a significant impact on overall economic performance.
Finance Minister Ndaba Gaolathe said the government expects a recovery in 2026, though fiscal pressures are intensifying.
Authorities are also considering raising the statutory debt ceiling from 40% to 60% of GDP to accommodate a widening budget deficit, signaling a shift toward increased borrowing to stabilize the economy.
