Botswana’s economy shrank by 5.4 percent year-on-year in the fourth quarter of 2025, official data showed Tuesday, as a prolonged downturn in the diamond market continued to weigh heavily on the country’s key mining sector.
Figures from Statistics Botswana showed that the mining and quarrying industry recorded a sharp 47 percent fall in value added during the October-to-December period, underlining the scale of pressure facing the southern African nation’s export-driven economy.
The contraction adds to growing concerns over Botswana’s heavy dependence on diamonds, which have long been the backbone of state revenues and foreign exchange earnings. The country has been grappling with weak global demand for natural stones, as consumers cut spending amid economic uncertainty and lab-grown diamonds continue to gain market share.
Other sectors that recorded declines in the fourth quarter included construction, as well as water and electricity, according to the statistics agency.
For the full year, Botswana’s economy contracted by 0.7 percent in 2025, following a 2.8 percent decline in 2024, extending one of the toughest periods for a country once regarded as one of Africa’s most stable economic performers.
For decades, Botswana built a reputation as an economic success story on the continent, thanks largely to prudent fiscal management, political stability and a thriving diamond industry. But the recent slump has exposed the risks of relying too heavily on a single commodity.
Diamonds typically account for about one-third of Botswana’s government revenues and around three-quarters of its foreign exchange earnings, making the sector crucial not only for growth, but also for public finances and currency stability.
The weak growth outlook is already feeding into fiscal pressures. Last month, Finance Minister Ndaba Gaolathe said the economy was expected to rebound in 2026, but warned that public debt would rise as the government runs another large budget deficit. Ndaba Gaolathe
In a sign of mounting strain on the public purse, Gaolathe last week sought parliamentary approval to raise Botswana’s statutory debt ceiling from 40 percent to 60 percent of GDP, a move aimed at giving the government more room to borrow and support the economy.
Even so, officials are hoping that an eventual recovery in global diamond demand, alongside efforts to diversify the economy, will help restore momentum this year. For now, however, Botswana remains vulnerable to the fortunes of a global gems market that has lost much of its sparkle.
