Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Botswana has one of the strongest economies in Africa and, according to the IMF, GDP grew by an estimated 4.1% in 2022, mainly driven by diamond exports and domestic demand. In the coming years, the country's economy should continue to grow, with GDP growth expected to reach 4% in 2023 and 2024. Investment in the mining sector and the rebound of the prices of hard commodities (diamond, copper, and nickel) should contribute to this performance.

Botswana has always maintained a conservative fiscal policy and low levels of foreign debt and, although general government debt increased to an estimated 21.3% in 2022 following a large fiscal response to the COVID-19 pandemic, Botswana's debt is still substantially lower than its neighbours. In 2023, the debt-to-GDP ratio is expected to decrease to 19.6%, with the phase-out of pandemic measures, and decline further in 2024, to 17.9%. Furthermore, Botswana's current account balance stood at 2% in 2022, and it is expected to reach 2.5% in 2023 and 4.2% in 2024, mainly due to the recovery of diamond revenue and an increase in tourism. In 2022, inflation remained above the central bank’s 3 – 6% target range. According to the Central Bank of Botswana, the rise in inflation in 2022 mainly reflected broad-based increase in the annual price changes for most categories of goods and services and, particularly, the upward adjustment in domestic fuel prices. However, inflation should decrease in the coming years, reaching 5.8% and 4.6% in 2023 and 2024, respectively. Although the country's “Economic Recovery and Transformation” plan, which was implemented to fight the effect of the pandemic on the economy, created fiscal pressures on the short run, Botswana's recovery packages have been effective in boosting economic activity, which has been recovering in the past few years. The fiscal consolidation policy the government is implementing should contribute to reducing the deficit and rebuild buffers in the medium term. Despite these positive outlooks, the growth level will remain too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants. The government’s priority is to diversify the economy, making it less dependent on a volatile mining sector, and rely more on agriculture, services, and manufacturing. Botswana is working to expand its services industry by creating 'hubs' in the health, education, innovation, financial services, and tourism sectors, which it hopes will also strengthen its regional integration. Public spending will continue to advance at a more rapid pace, prioritising areas identified in the National Development Plan 11 (NDP11) that focuses on three key objectives: tackling poverty, ensuring inclusive growth, and job creation.

Botswana is regularly ranked first among African countries regarding governance and transparency. Its primary assets are its robust regulatory framework and facilitated procedures for property registration. However, despite its relative prosperity, Botswana still has one of the highest levels of inequality in the world and suffers a high unemployment rate and a lack of skilled labour. According to the last available data, in 2021, the unemployment rate in the country was an estimated 24%, and it was especially high among young people. In September 2021, the country approved the The National Employment Policy for Botswana, a plan which aims to provide a comprehensive response to the challenge of unemployment facing the country.

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