Botswana's economy is expected to grow by 3.1% next year, as a plodding recovery in diamond demand and other factors gathers pace to fuel a stunning economic rebound in the southern African country.

According to recent figures from Bank of Botswana, the nation's economy plunged by 5.3% year-on-year in the 2nd quarter of 2025.

 The development in the second quarter of 2025 extended Botswana's economic downward trend into a 6th consecutive quarter following a revised 0.4% decline in the first quarter of 2025.

However, when addressing journalists in Francistown, Botswana's second largest city following the Monetary Policy Committee (MPC) meeting, the newly appointed Bank of Botswana Governor, Lesego Moseki talked of an expected economic rebound in 2026.

Moseki said the expected economic rebound has coerced the country's central bank to maintain the monetary policy rate at 3.5% with a view of easing Botswana's fiscal and external buffers.

"The economy is expected to recover in 2026, with a projected 3.1% growth, supported by a gradual rebound in diamond demand, expanded non-diamond mining production and beneficiation, increased domestic electricity generation, and the catalytic impact of the Botswana Economic Transformation Programme (BETP) driven reforms across several economic sectors."

 The Botswana Economic Transformation Programme that was launched by President Duma Boko in June 2025 aims to diversify Botswana's economy and reduce heavy reliance on diamond mining through the creation of a more resilient and inclusive economic landscape.

Going into 2026, Moseki advised the Boko administration to focus with greater rigour and urgency on the implementation of growth-enhancing initiatives and economic diversification efforts, as indicated in the economic transformation programme to support a sustainable recovery.

 Neo Nwako, the president of Business Botswana, a key representative of the business community in Botswana, told nbc News that the decision by the central bank to maintain the repo rate is a welcome development for business.

"Of course, it is relief. Obviously, we were worried that without the Bank of Botswana's intervention, the lending rates will go up again. And I think that discussion with the commercial banks not to increase the lending rates was actually a big relief because when we heard that Bank of Botswana is relooking at rates again. Things are very fragile at the present moment, we did feel the repercussions of the movement in rates." 

 According to the 2025 World Economic Outlook, global economic growth was 3.3% in 2024 and is forecast to remain subdued at 3.2% and 3.1% in 2025 and 2026 respectively.