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Diamond Rebound to Boost Botswana Growth

Oct 21, 2020 4:45 AM   By Rapaport News
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Botswana’s government expects the country’s economy to return to growth next year on the back of a recovery in the diamond sector.

The nation’s gross domestic product (GDP) will increase 7.7% in 2021, Thapelo Matsheka, minister of finance and economic development, forecast Monday in a meeting with the World Bank. GDP fell 24% year on year in the second quarter of 2020 as a result of the Covid-19 crisis, and will shrink around 9% for the year as a whole, he added.

The pandemic wounded the Botswana economy, primarily because of the downturn in the global diamond industry, as well as the slowdown in tourism, Matsheka explained in remarks published on the government’s Facebook page. Those two sectors account for a large proportion of the country’s revenues.

Border closures prevented De Beers customers from entering the country to buy rough at sights, while consumer sales in major retail markets also slumped. De Beers’ production in the country — a major driver of Botswana’s GDP — slid 68% year on year to 1.8 million carats in the second quarter, with the miner’s total rough sales plummeting 96% to $56 million.

However, polished manufacturers returned to rough buying in August as shortages emerged ahead of the holiday season. De Beers also reduced rough prices to bolster demand.

“On a positive note, recent months have seen a robust recovery in the international diamond industry, which will hopefully underpin strong growth in Botswana next year and help to boost exports and fiscal revenues,” the minister added.

De Beers will release its third-quarter production and select sales data this Thursday.

Image: De Beers’ Jwaneng mine in Botswana. (Shutterstock)
Tags: Botswana, De Beers, finance, gdp, gross domestic product, Production, Rapaport News, Thapelo Matsheka, World Bank
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