Botswana Growth Outlook Weakens Firms

Businesses in Botswana are increasingly viewing government spending as a major constraint on operations, reflecting what firms describe as the country’s weakened fiscal position, according to the Bank of Botswana Quarterly Business Expectations Survey for March 2026. “In addition, the exchange rate environment was viewed as unfavourable, partly due to adjustment costs and spillover effects associated with the July 2025 exchange rate policy changes,” the report states. The survey notes that firms also expect tighter financial conditions ahead, including higher borrowing costs and increased lending rates over the year to March 2027.

According to the survey, businesses expect overall cost pressures to rise in the second quarter of 2026 compared to the first quarter. The report links this outlook partly to geopolitical tensions, stating that the war in the Middle East is expected to affect commodity prices, supply chains, and broader operating conditions. Despite this, inflation expectations remain relatively stable.

Firms anticipate inflation to stay within the 3%–6% objective range in 2026 and 2027, suggesting what the report describes as “well anchored” expectations. “The survey covers the quarter in which it is conducted (also referred to as the current period), the subsequent quarter, and the following 12 months,” the report explains, noting that firms respond on business conditions, inflation, growth expectations, and performance outlooks. Firms were generally pessimistic about business conditions in the first and second quarters of 2026, as well as the year to March 2027.

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Overall output is expected to expand by 1.7% in 2026, a recovery from a 0.7% contraction recorded in 2025. The report says this points to “a gradual stabilisation in growth momentum,” broadly aligned with the Ministry of Finance’s projection of 3.1% growth in 2026. For the first and second quarters of 2026, firms anticipate modest growth of 0.9% and 1.4%, respectively.

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