Botswana’s economic growth in 2026 is expected to slow as rising inflation weighs on consumer spending and key sectors of the economy.
Recent data show inflation climbing from 3.9 percent in the fourth quarter of 2025 to 4.1 percent in the first quarter of 2026. Projections indicate a sharper increase in the second quarter, driven largely by recent hikes in fuel prices, public transport fares, and medical aid premiums.
The Bank of Botswana’s Monetary Policy Committee forecasts inflation to rise from an average of 4.1 percent in the first quarter to 9.0 percent in the second quarter. Inflation is then expected to remain elevated, at 11.1 percent in the third quarter and 10.7 percent in the final quarter of the year. The committee’s annual inflation forecast for 2026 stands at 8.7 percent, up sharply from 2.7 percent in 2025.
Local research firm Econsult warned that, factoring in the fuel price increases and related cost pressures such as higher public transport fares, inflation is likely to stay in double digits over the next year. The firm cautioned that sustained high inflation will erode household incomes and hurt sectors reliant on consumer spending.
“Inflation is set to rise to over 10% due to the increase in fuel prices. This will impact on real incomes for all Botswana households, and will put pressure on sectors such as wholesale and retail trade, and financial services, which rely on consumer spending to a large extent,” Econsult said.
The wholesale and retail sector, which focuses on fast-moving consumer goods, is one of Botswana’s key economic areas. It ranked as the second-largest contributor to GDP by economic activity in the fourth quarter of 2025, contributing 13.2 percent and growing by 4.1 percent—slower than the 7.8 percent growth recorded in the same quarter of 2024.
The financial services sector, the fifth-largest contributor to GDP in the last quarter of 2025, also faces headwinds. It grew by 3.1 percent in that period but is vulnerable to the inflationary pressures.
Econsult highlighted the tourism sector as another area likely to suffer. Rising prices of fuel, including aviation fuel, are expected to reduce international visitor numbers, undermining a crucial pillar of Botswana’s economic diversification efforts.
“The tourism sector will be adversely impacted by reduced international visitor numbers, given the sharp increase in air travel costs due to higher aviation fuel prices, as well as reduced domestic and regional discretionary spending,” the firm noted.
Other sectors, including real estate services and construction, will face challenges due to the high cost of borrowing amid continued government borrowing. The agricultural sector is also expected to feel the pinch from rising fertilizer prices.
“Other sectors will be more affected by domestic factors, notably the limited availability and high cost of bank credit, driven by continued high government borrowing; these include real estate services and construction. Rising global fertilizer prices due to the war will have a longer-term impact on the arable farming sector,” Econsult said.
Before these inflationary pressures and their impact on Botswana’s economy, the International Monetary Fund had forecasted 4.7 percent growth for 2026. Some local analysts now consider that forecast overly optimistic and expect revisions downward. In March 2026, S&P Global Ratings released new projections estimating a more modest economic recovery of 2.5 percent.