Gaborone – After poor performance in 2020 when the COVID-19 pandemic led to a sharp decline in demand for diamonds, gem sales had a good start to 2021 through to the middle of the year, data from Econsult in Botswana say.
The rebound of the global diamond market is important for Botswana as it will provide a boost to export earnings, the external account balance and government revenues.
In their 2021 half-year review, Econsult attributed the recovery to fiscal support by governments to the sector, and vaccination drives that have allowed economies to gradually reopen.
“All industry segments continue to report positive sales, while demand has been driven by the two key markets of the United States and China. The diamond industry has also benefited from the prolonged slowdown of spending on travel and tourism due to movement restrictions, and the diversion of some spending to consumer demand for diamond jewellery,” noted Econsult.
The firm says the De Beers Group reported strong sales during H1 2021 when compared to the same period last year. De Beers Global Sightholder Sales (DBGSS) increased sales by 178 percent from US$906 million in H1 2020 to US$2.5 billion in H1 2021.
“The rebound is attributable to increased production and sales volumes as well as higher rough diamond prices. During the half year, production across Botswana’s mines increased by 43 percent, from 7.5 million carats to 10.7 million, carats while the average price per carat increased by 13 percent to US$135 per carat in H1 2021 from US$119 per carat,” the report says.
Regarding tourism, another sector hard hit by the pandemic, Econsult says it is difficult to forecast when recovery is expected as restrictions on movements are periodically reviewed in response to pandemic trends.
The firm said Botswana government support for the sector was vital for its survival. They added stakeholders in the sector also needed to invest in regaining travellers’ trust and promoting domestic tourism.
“In Botswana, the accommodation and food services sector has had the deepest and most prolonged contraction of any economic sector. Continued domestic travel restrictions will inhibit the extent to which domestic tourism can compensate for the loss of international tourists,” the report said.
On an annual basis, the economists found that Botswana’s real GDP growth continued to worsen as a result of the impact of COVID-19 pandemic. Real GDP contracted by 8.6 percent year-on-year in Q1 2021.
Based on new data, the economy contracted more in 2020 than was originally estimated, but growth was higher in 2016 and 2017. Year-on-year real GDP contracted by 8.5 percent in 2020 rather than the 7.9 percent originally calculated.