GABORONE, Botswana / AfricaWire.IO / – Botswana’s diamond-dependent economy is showing signs of recovery after a two-year slump, with fiscal authorities raising this year’s growth forecast to 3.8% from an initial 3.1%. The upgrade reflects stronger diamond production in the first half of the year. The downturn was largely caused by a slump in the diamond industry that began in the third quarter of 2023. Minerals and Energy Minister Bogolo Kenewendo said she was cautiously optimistic about the sector.
Local diamond production reached 15.1 million carats so far this year, according to ministry data, up 14% from 13.3 million carats in the same period of 2025. Kenewendo said diamonds appear to have hit rock bottom and started bouncing back. She said demand in the US market has swung from a decline of about 3.3% to growth of 5% to 6%, and even double digits in July. India is seeing similar growth, she added.
Natural diamonds are mounting a fightback against synthetic stones, global economic uncertainty and US tariffs, led by producers including Botswana and De Beers. Kenewendo said the intent to purchase natural diamonds in India and the Far East is about 25% to 26%, compared with 17% for synthetics. She said consumers are slowly gravitating back to natural diamonds. The slump had weighed heavily on Botswana, which faced a credit rating downgrade earlier this year.
Copper mining gains momentum
Growth outside diamonds is also emerging, especially in copper. MMG is investing about $900 million to expand its Khoemacau mine, which will become one of the largest copper producers in the region. MMG approved the project in December 2025, targeting output of 130,000 tonnes of copper a year, with first production from the expansion expected in 2028. Kenewendo said the mine will employ 7,000 people, making it the largest mine ever in Botswana by employment.
Copper exports have grown from zero in 2016, when the major mines closed, to 11.1 billion pula in 2025. By July this year, they had reached 8.5 billion pula, up 27% from a year earlier. The state-owned Exploration Investment Company Botswana is leading a campaign to de-risk early exploration across four belts promising chrome, lithium, platinum, manganese, uranium and nickel. Botswana’s copper push echoes efforts in Zambia, where the UAE is deepening economic ties.
Inflation clouds the outlook
The Bank of Botswana said on Thursday the improved outlook reflects stronger-than-expected performance in the first half of 2026, underpinned by higher diamond production. Growth in other sectors has varied but remains modest overall, it said. Analysts warn that much of the recovery comes from the mining rebound and is not directly reducing poverty. Slow job creation and high inflation continue to limit the benefits for ordinary Batswana.
The central bank now expects inflation to average 8.1% this year, up from its August forecast of 5.9%. Governor Lesego Moseki said risks are tilted to the upside because of higher domestic fuel prices and electricity tariffs. El Niño effects, including drought, crop failure and livestock deaths, add further risk, the governor said. Elevated prices for oil, gas and fertilizers linked to the Middle East conflict, along with global trade tensions, are also expected to push prices higher.