Credit rating agency S&P Global Ratings has downgraded Botswana’s long-term foreign and local currency sovereign credit ratings to BBB- from BBB, citing prolonged weakness in the global diamond market that is expected to weigh on the country’s minerals-dependent economy for longer than anticipated.
Botswana is one of the world’s leading producers of natural rough diamonds and Africa’s largest diamond producer, with the sector historically accounting for about 70% of exports and roughly one-third of government revenue.
According to S&P, the downgrade reflects mounting vulnerabilities in an economy heavily dependent on diamonds.
However, the global diamond industry has entered a prolonged downturn. S&P noted that lab-grown diamonds have captured around 20% of the global market by value and up to 50% by volume in the U.S. engagement ring segment, significantly eroding demand for natural stones.
At the same time, weak consumer spending in major markets such as China, alongside shifting preferences toward gold jewelry and luxury spending slowdowns, has further dampened demand.
Output fell 27% to 17.9 million carats in 2024, before declining further to 15.1 million carats in 2025. Production is expected to remain around 15 million carats in 2026, roughly 40% below 2023 levels.
Diamond dependence exposes economic limits
Limited diversification means fluctuations in diamond demand quickly translate into fiscal pressure and slower economic growth.
S&P expects Botswana’s economy to grow only 2.5% in 2026, following contractions of 2.8% in 2024 and 0.4% in 2025. Meanwhile, the fiscal deficit is projected to reach 8.9% of GDP in the 2026/27 financial year, only slightly improving from 9.3% the previous year.
Without significant economic diversification or a strong rebound in global diamond demand, analysts warn that the country’s growth prospects and fiscal stability could remain under strain for years.
