By Brian Benza
GABORONE (Reuters) - Botswana's economy is expected to grow 3% to 4% in 2025 after a contraction last year, a senior government official said at a budget workshop on Friday, as the global diamond market is anticipated to recover.
The Southern African country's economy shrunk 3.3% in the first three quarters of 2024, raising government expectation of a bigger contraction than the 1.7% forecast in December. An updated contraction estimate was not given.
"The domestic economy is anticipated to rebound in 2025 to a growth of 3-4%, reflecting a combination of base effects, the global recovery in the major diamond export markets and continued growth in the non-mining sector," director of macroeconomic policy in the finance ministry, Walter Matekane, said.
Botswana's economy is largely dependent on the export of diamonds, and declining earnings from the precious stone have limited government spending.
Diamond sales remained weak throughout 2024 and Debswana, a joint venture between Botswana and De Beers, lowered its production guidance for last year by about 6 million carats to 17.9 million carats.
Botswana expects a recovery in mineral revenues to narrow the budget deficit to 3.6% of gross domestic product (GDP) in 2025/26 from 6.75% of GDP forecast for the 2024/2025 fiscal year, a presentation by Matekane showed.
Botswana's finance minister Ndaba Gaolathe is expected to deliver the 2025/26 national budget in February.