Botswana bets on diamond exports to boost growth

Botswana’s real GDP growth is expected to be 4.6% in 2022 and 4.2% in 2023, estimated Fitch Solutions Country Risk & Industry Research in a report titled “Diamond Exports Will Support Botswana’s Economy”. Botswana in 2022” (Diamond Exports To Support Botswana’s Economy Over 2022) and published on Monday 18 July.

“Botswana’s real GDP growth is expected to slow to 4.6% in 2022 from 11.4% in 2021, as high inflation reduces consumer purchasing power and tighter monetary conditions limit investment growth” , underlines the document.

Diamond exports, whose production is expected to increase by 14% in 2022, will be the main driver of economic growth in 2022, while the increase in imports will remain moderate amid a slowdown in domestic demand.

Household consumption should indeed record growth of 1.8% over the whole of the current year against 8% in 2021, due to “strong inflationary pressures” due to the rise in fuel and food prices. food that will erode consumers’ purchasing power.

Fitch Solutions also believes that tighter monetary policy is likely to dampen investment growth. Gross fixed capital formation is expected to increase by only 3.4% during the year, a rate well below the annual average of 6.2% recorded during the decade before the outbreak of covid-19.

For 2023, Botswana’s real GDP growth is expected to slow to 4.2%, due to weaker prospects for diamond production.

The expected decline in inflation should, however, help to boost household consumption. The signing of a new supply contract between the government and South African diamond conglomerate De Beers, scheduled for next year, is also expected to boost investment in the country’s mining sector.