Botswana’s economy will rebound and grow 7.7% in 2021 from an 8.9% contraction forecast this year, on the back of improved sentiment in the global diamond industry, the finance minister said on Tuesday.
Botswana’s economy shrank by 24% in the second quarter of 2020 as coronavirus lockdowns at home and abroad slowed domestic economic activity and severely constrained diamond sales. Buyers of the precious gem were locked out of the capital Gaborone, where they come to purchase diamonds from De Beers.
Mining is the sparsely populated southern African country’s biggest revenue earner and accounts for just under 20% of total gross domestic product.
“Recent months have seen a robust recovery in the international diamond industry, which will hopefully underpin strong growth in Botswana next year and help to boost exports and fiscal revenues,” Finance Minister Thapelo Matsheka said during a World Bank online meeting held late on Monday.
“Based on these developments, we are forecasting a GDP growth rate of 7.7% in 2021,” Matsheka told World Bank Vice President for Eastern and Southern Africa, Hafez Ghanem, during the meeting.
Global firm De Beers, which gets about 70% of its supply from Botswana, said last week it had seen a 57% jump in sales to $467 million at its September “Sight” – when selected buyers come to view and purchase goods already priced by De Beers.
The firm cited higher retail orders ahead of the holiday season.