November 5, 2012 / 3:28 PM / 5 years ago

Sluggish diamond demand to hit Botswana 2012 growth

GABORONE (Reuters) - Botswana’s economic growth is expected to slow to 3.5 percent this year from 8 percent in 2011 due to lower-than-expected mining output, President Ian Khama said on Monday.

In a state of the nation address, Khama said reduced output from the mining sector in particular was likely to drag growth below the 4.4 percent projected in the February budget.

“The diamond market has been significantly affected by the prevailing global economy slowdown. We expect this to adversely affect our economy, as diamonds are still a significant contributor to our GDP,” President Ian Khama said.

The landlocked southern African nation is the world’s biggest diamond producer, making its economy vulnerable to switches global demand trends.

Subdued demand from key markets such as China has seen production stagnate, putting a lid on growth prospects in a country that depends on mining for about a third of its economy.

Khama said growth should pick up to 5 percent next year.

The International Monetary Fund said last month Botswana’s economy should grow 3.8 percent this year, up from the 3.3 percent forecast in the April.

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