Unemployment is expected to remain stubbornly high over the next two years as weak economic growth, diamond-sector volatility and rising living costs continue to squeeze households.
According to Business Monitor International (BMI),unemployment rate in Botswana is forecast to average 24.4% in 2026 and remain at 24.4% in 2027. The projection is only marginally below the estimated 24.5% recorded in 2025 but remains substantially above Botswana’s pre-pandemic average of 21.6% between 2015 and 2019, BMI says in its Botswana 2026 Consumer Outlook.
The report describes unemployment as ‘structurally high’ and warns that elevated joblessness will continue to undermine consumer spending.
BMI’s assessment comes against a backdrop of weak economic growth. The firm expects Botswana’s real GDP to grow by only 1.7% in 2026, following a 0.7% contraction in 2025, with growth forecast at 1.5% in 2027.
The report says the diamond industry remains central to the weakness. BMI says sluggishness in the diamond sector is weighing on economic activity, while volatility in production reflects demand uncertainty and operational disruptions at major mines.
The consequences are expected to extend beyond mining with weaker activity affecting household incomes and employment across related sectors.
‘Structurally elevated levels of unemployment will provide downside risks to consumer spending in Botswana,’ BMI says. It argues that households will continue prioritising essential goods over discretionary purchases. The report also highlights the particular vulnerability of young people, estimating that youth unemployment is above 30%.
This means that even a modest recovery in headline economic growth may not translate quickly into meaningful improvements in employment or household purchasing power. BMI forecasts real household spending to contract by 1.0% year-on-year in 2026 to P131.2 billion, measured at 2010 prices.
That would mark a sharp deterioration from the 1.4% real growth recorded in 2025. BMI says a modest recovery is projected in 2027, when household spending is expected to grow by 1.3%, but BMI cautions that purchasing power will remain weak.
The firm expects average household purchasing power to be only 3% above 2019 levels in 2026, increasing to just 5% above pre-pandemic levels in 2027.
Over the medium term, real purchasing power is forecast to grow by an average of only 0.2% annually through 2030.
The firm says inflation is another major threat. BMI forecasts average inflation of 7.6% in 2026, sharply above 2.6% in 2025, before easing to 5.4% in 2027. The report says higher energy prices are feeding into domestic fuel and transport costs, while food-price pressures remain particularly problematic for lower-income households.
Although Botswana’s headline inflation eased from 10.7% in June to 9.4% in July, BMI notes that core inflation moved in the opposite direction, rising from 5.8% to 6.3%.
BMI says household debt provides another drag on consumption. BMI says household debt stood at 20.1% of GDP in the first quarter of 2026, down from 21.3% in the fourth quarter of 2025.
However, higher interest rates are increasing the cost of servicing existing debt while discouraging new borrowing. The report notes that the Bank of Botswana’s monetary policy rate stood at 5.5% in June, compared with 3.5% at the beginning of the year. BMI expects the rate to rise further to 6.5% during 2026.