Botswana's economy may not achieve the government's projected growth target of 4.2% for this year, according to a senior central bank official. The central bank cited both global and domestic challenges as key constraints.
Finance Minister Peggy Serame had forecast a 4.2% GDP increase in a budget speech in February, anticipating a boost from the diamond sector. The country's GDP grew by 2.7% in 2023.
However, the mining sector, heavily reliant on diamonds, continues to face difficulties due to sluggish global market conditions. Sales at Debswana Diamond Company, a joint venture between Botswana's government and Anglo American's De Beers unit, were down about 48% year-on-year in the first quarter of 2024.
Innocent Molalapata, the central bank's director of research and financial stability, noted during an economic briefing that unfavorable global economic conditions and domestic structural constraints have hampered growth prospects. "From what we have seen in the first half of the year, unfavourable global economic conditions… as well as domestic structural constraints, one would expect that we are unlikely to attain the projected economic growth," Molalapata stated.
Molalapata indicated that a downward revision of the growth target might be necessary, highlighting that mining output contracted by approximately 27% in the first quarter.
The Bank of Botswana typically refrains from providing precise GDP growth forecasts, leaving such projections to the finance ministry. Meanwhile, the International Monetary Fund (IMF) forecasts Botswana's economy will grow by 3.6% in 2024.
