By: Business day

Botswana’s economy accelerated sharply in the third quarter of 2025, expanding by 10.9% year-on-year—the fastest growth rate in five years—after contracting by 3.5% in the previous quarter. The rebound was fueled primarily by a resurgence in diamond trading and mining, alongside strength in finance, transport, and hospitality.

Diamonds remain the cornerstone of Botswana’s economy, contributing roughly 80% of export earnings and about 30% of government revenue. The strong Q3 performance contrasted with a prolonged slump in 2024 and early 2025, when weaker demand from key markets like China and the U.S. led to a significant decline in diamond exports and contributed to an economic contraction earlier in the year.

Despite the recent upturn, the earlier downturn prompted monetary tightening by the Bank of Botswana, which raised its benchmark interest rate to 3.5% in October 2025—a 43-month high—to address tightening liquidity and align policy rates with elevated market lending rates. Governor Cornelius Dekop described the move as necessary to strengthen monetary policy transmission.

Compared to larger African economies, Botswana’s growth outpaced South Africa’s 0.5% expansion and Nigeria’s 3.98% growth in the same quarter. The nation’s recovery underscores the ongoing centrality of diamonds to its economic stability and highlights the challenges of managing an economy heavily reliant on a single, globally sensitive commodity.