Botswana warns diamond oversupply to hit growth

Gaborone, Botswana: Botswana is sitting on nearly double its permitted diamond stockpile as weak prices and rising competition from lab grown stones c...

Gaborone, Botswana: Botswana is sitting on nearly double its permitted diamond stockpile as weak prices and rising competition from lab-grown stones curb demand, the government said, warning the glut will weigh on economic growth.

The cash-strapped southern African country, the world's second largest diamond producer after Russia, relies on the gems for about a third of its GDP.

It held 12 million carats at the end of December, far above the 6.5 million government ceiling, the finance ministry said in its 2026/27 Budget Strategy Paper published Tuesday.

"This suggests that, over the short term, production is expected to remain broadly unchanged, until the level of inventories is drawn down closer to minimum allowable levels, creating room for additional production," it said.

The downturn has been compounded by softer buying in the United States and China, the world's biggest diamond markets, where retailers have cut orders amid a shift towards cheaper lab-grown stones.