Industry News by Nemesis

Botswana Mining Slowdown Hits Economic Growth

March 4, 2020

Botswana’s economic growth slowed last year due to lower rough production, further aggravated by weakness in its diamond-manufacturing sector, the nation’s central bank said last week.

Gross domestic product (GDP) increased 3.7% in the 12 months to September 2019, compared with a 5% rise in the previous year. The main factor was sluggish diamond-mining output, which increased 2.1%, versus 3.2% a year earlier, the Bank of Botswana reported. “Weaker performance” at the country’s diamond-cutting businesses also contributed, it continued.

The observation is broadly in line with a 4% drop in De Beers’ production in Botswana last year, as weak rough demand prompted the company to limit output.

The government expects an improvement in economic activity this year as it predicts a recovery in the mining sector and an improvement in the global economy. However, the country has been trying to minimize its overreliance on diamond mining, which accounts for a large proportion of its total exports.

“The continued tension between the US and China, who are the two major markets for our diamond exports, continues to undermine the country’s economic performance in general, and the fiscal position in particular,” Botswana Finance Minister Thapelo Matsheka said in his annual budget speech last month. “It also heightens the need for measures to promote diversified exports to reduce the impact of external shocks on the domestic economy.”

 

Source: Rapaport

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