Fixed investment weakness threatens Botswana’s economic recovery in 2026

Botswana’s investment in fixed assets, including infrastructure, transport equipment, and plant machinery, fell sharply in the first quarter of 2026, raising concerns about the pace of the country’s economic rebound. According to the latest figures from Statistics Botswana, fixed asset investment dropped by P1.2 billion, from P11.6 billion in the first quarter of 2025 to P10.4 billion in the same period this year. A closer look at the data reveals that spending on plant machinery plunged by P635.4 million, declining from P2.3 billion to P1.7 billion.

Investment in transport equipment also took a hit, falling by P457 million from P888.4 million to P431.1 million. Meanwhile, infrastructure investment; covering buildings and structures; saw a modest decline of P104.9 million, slipping from P8.2 billion to P8.1 billion. Investment in mining prospecting held steady at P20.8 million.

In a recent update, Fitch Solutions linked this contraction in fixed investment to fragile business confidence. The consultancy projected continued caution among firms, citing ongoing uncertainty in global diamond markets and tighter credit conditions as key factors weighing on investment decisions. “Looking ahead, we expect firms to remain cautious in committing to new investment, as uncertainty in global diamond markets persists, while tighter financial conditions will further weigh on credit demand,” Fitch Solutions said.

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The firm further warned that the contribution of fixed investment to Botswana’s real Gross Domestic Product (GDP) is expected to stay subdued or even negative throughout 2026, dampening the scope of the country’s economic recovery. Botswana’s real GDP, which shrank by 5.4 percent in the last quarter of 2025, rebounded by 3.5 percent in the first quarter of 2026. But Fitch Solutions’ analysts remain cautious about the broader outlook.

They forecast only a modest recovery for the full year, with growth rising from a contraction of 0.7 percent in 2025 to 1.6 percent in 2026. The analysts flagged the economic fallout from the US-Iran conflict as a looming risk, expected to weigh more heavily from the second quarter of 2026 onward. “We maintain our forecast that real GDP growth will recover only modestly, from a contraction of 0.7% in 2025 to 1.6% in 2026.

We expect that the negative spillovers from the US-Iran conflict – particularly via higher inflation and import costs – will become more evident from Q2 2026 onwards,” the experts said. While the immediate threat of disruption in the Strait of Hormuz has lessened, Fitch cautioned that ceasefire negotiations may drag on unevenly, prolonging uncertainty. “As a result, higher import costs, continued external uncertainty and weak diamond demand will limit export growth and weigh on investment.

Combined with constrained fiscal space, this suggests that Botswana’s recovery in 2026 will remain modest and narrowly based rather than broad-driven,” the firm said. They anticipate fixed investment will contribute just 0.9 percentage points to GDP growth this year. Despite the cautious outlook, Botswana’s investment picture is buoyed by committed capital expenditures in mining, notably the Jwaneng Cut 9 project, alongside government initiatives under the 12th National Development Plan (NDP12), which emphasizes infrastructure, mining support, and economic diversification. Copper-related capital spending is also expected to bolster investment, supported by high prices and renewed exploration activity, according to Fitch Solutions.

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