Botswana's economic growth slows to 1% in 2024 -IMF

The International Monetary Fund has projected Botswana's economic growth to slow down to 1% in 2024, down from 2.7% in 2023, primarily due to a reduction in diamond production. The decline in diamond production will be partly offset by construction projects funded through fiscal expansion. Botswana relies heavily on diamond revenues, which account for about 40% of public revenues, nearly a third of GDP, and 75% of foreign exchange earnings. The natural diamond market is facing a crisis due to declining demand and prices as consumers increasingly turn to synthetic stones. Inflation is expected to remain within the Bank of Botswana's target range of 3% to 6% in the medium term, supported by falling international oil and food prices. The Bank of Botswana has cut its policy rate twice by a cumulative 50 basis points since December 2023, following a previous increase of 151 basis points during 2022. Botswana's economic growth decelerated from 5.5% in 2022 to 2.7% in 2023, below the long-term potential growth of 4%. A sharp decline in diamond trading and mining activities was the main contributor to the slowdown as global demand for rough diamonds decreased. Despite the weak diamond market, the external position improved last year due to strong customs union revenues. On the fiscal front, the IMF forecasts a budget deficit widening to 6% of GDP in 2024, driven by falling mining revenues and increased capital expenditures.