Rising Prices Loom for Goods and Food

Batswana should brace for rising prices as goods and food costs are set to increase this year Batswana should brace themselves for increases in prices of goods and food items as Botswana’s economy is expected to record a modest rebound in 2026. Lingering uncertainty in the global diamond market and unresolved questions over De Beers’ future ownership continue to weigh heavily on the outlook. This warning is contained in Business Monitor International (BMI)’s latest Country Risk economic review for Botswana, which revised the country’s 2026 real GDP growth forecast down to 2.3% from a previous estimate of 2.7%.

The downgrade follows revisions to 2025 growth data after stronger-than-expected economic performance in the third quarter of last year raised the statistical base. BMI now estimates Botswana’s economy grew by 0.9% in 2025, a sharp upward revision from an earlier forecast contraction of 3.3%. The improvement was largely driven by a strong rebound in diamond trading and mining activity after prolonged weakness.

Real GDP expanded by 8.2% year-on-year in the third quarter of 2025, ending six consecutive quarters of contraction. The surge was underpinned by an 88.1% jump in diamond trading and a 39.5% increase in mining and quarrying output, following the resumption of De Beers’ diamond production in Botswana. De Beers had temporarily halted production in the second quarter of 2025, while the Jwaneng mine was closed for maintenance throughout the fourth quarter.

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However, BMI cautions that the recovery remains narrow and externally driven. Non-mining real GDP grew by just 1.6% year-on-year in the third quarter of 2025, reinforcing concerns that growth momentum outside the diamond sector remains weak. “The upturn in 2026 will be heavily dependent on the diamond cycle and stabilisation in mining activity, rather than a broad-based recovery,” BMI noted.

Mining is expected to remain the main engine of growth in 2026, supported by continued operations at De Beers’ mines and a ramp-up in coal mining activity. Additional support is expected from selective projects under the government’s 12th National Development Plan (NDP12), which prioritises infrastructure development, mining support, and economic diversification. Copper-related investments, buoyed by elevated global prices and renewed exploration, are also expected to contribute.

Despite this, BMI warned that investment gains will remain modest. High diamond inventories, subdued global demand, and uncertainty surrounding De Beers’ ownership structure are likely to keep discretionary mining investment cautious, while tight liquidity conditions continue to constrain private sector capital spending outside mining. Government consumption is expected to remain supportive, contributing 0.6 percentage points to growth in 2026.

Private consumption, meanwhile, is projected to contribute just 0.1 percentage points to growth, restrained by rising inflation and tight credit conditions. Inflation climbed from 1.1% in July 2025 to 3.9% in December and is expected to average 4.4% in 2026, remaining within the Bank of Botswana’s target range.

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