Economic Outline

Economic Indicators

Botswana has one of the strongest economies in Africa and its economic success has stemmed from strong governance, sound policies, and effective diamond wealth management. However, limited economic diversification and heavy reliance on diamonds have made the economy vulnerable to price shocks. A dominant public sector continues to hinder private investment, export growth, job creation, and productivity. The country’s economic growth slowed from 5.5% in 2022 to 2.7% in 2023, falling below the long-term potential of 4%. The main driver of the slowdown was a sharp drop in diamond trading and mining due to weaker global demand for rough diamonds, which was exacerbated in 2024, resulting in a GDP contraction of 3.1% (official governmental data). Botswana's economy is projected to grow by 3.3% in 2025, supported by an anticipated recovery in the global diamond market, according to the projections of the Ministry of Finance.

Botswana has always maintained a conservative fiscal policy and low levels of foreign debt, and although general government debt increased to an estimated 22.6% in 2024 (from 20.1% one year earlier), by 2026, the debt-to-GDP ratio is expected to decrease to around 20.7%, as per the IMF projections. The fiscal deficit was expected to widen to 6% of GDP in FY2024, driven by lower mineral revenues and increased capital spending. The government aims for significant fiscal adjustment over the next two years to achieve a surplus. Externally, the position is set to weaken, with foreign exchange reserves projected to fall to five months of imports amid sluggish customs revenue growth and rising external debt repayments. Meanwhile, inflation has dropped significantly since its mid-2022 peak, returning to the central bank’s target range of 3–6%, where it is expected to stay over the medium term. According to the IMF, to accelerate growth and job creation, Botswana must shift towards greater private sector involvement, a diversified export base, and a more efficient public sector. Key priorities should include modernizing state-owned enterprises (SOEs), improving business infrastructure (such as internet, energy, and logistics), enhancing trade facilitation, streamlining social protection, and promoting financial inclusion for small entrepreneurs. These objectives could be incorporated into the new National Development Plan (NDP), with clear, time-bound action plans.

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 (Gini index of 53.3) and suffers from a high unemployment rate and a lack of skilled labour. The unemployment rate remains elevated at around 27.6% and is especially high among young people. The country’s GDP per capita (PPP), estimated at USD 19,723 in 2024 by the IMF, is considered high by regional standards.   

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