Improving diamond market to benefit Botswana’s economy

  • Analysts say the US and China will support demand for diamonds in 2018


Botswana’s economy is expected to benefit from improving prices of diamonds in the international market, according to US research company Rappaport.

In a recent report, the company indicated that following declining diamond prices in 2017, the market for diamond exports recorded recovery since the beginning of January and is expected to continue recording improvement during the first quarter of this year.

According to the recent figures, prices for 0.30-carat polished diamonds declined by 1.2% while 0.50 carat diamonds dropped by 20.7% in 2017. The index shows that 1-carat diamonds dropped by 4.7% in the first 10 months of the year and have fallen 5.4% over the 12 months of the year.

Three-carat is the only category which recorded increase in prices after rising by 4.7% during 2017. The company stated that in 2017, the global market had an inflated volume of rough diamonds coupled with sluggish polished diamond sales, a situation which is expected to change this year.

The price index released by the company last week shows that prices for 1-carat polished diamonds rose by 2.2%, 0.30-carat diamonds increased by 2.3%, while 0.50-carat stones gained 2.4% and 3-carat diamonds edged up 0.5% since the beginning of this year.

Analysts from Rappaport indicated that prices for rough diamonds are also expected to increase as a result of improving prices for polished diamonds. “Rough diamond prices are expected to also rise in the coming months as miners seek to resume growth in an improving polished market, particularly after last year’s sales declines,” said Rapapport Senior Analyst, Avi Krawitz.

The analyst indicated that economies for Botswana and other diamond exporting countries which target the US and China are expected to benefit. “Positive consumer spending in the US and China is likely to support polished prices and continues to fuel optimism for 2018,” he said.

Industry analysts have projected that demand for diamonds in the international market is expected to expand by 11% in 2018 and the growth will be driven by the growing middle class population in China and cyclical recovery in US consumer spending in luxury goods such as diamond jewellery.

According to the analysts, incomes for consumers in emerging markets are projected to continue improving this year, resulting with an increase in middle class population at the markets, a development which could result with increased demand for diamond jewellery.

Recent data from the Ministry of Finance and Economic Development shows that as a result of the improving market for diamonds, Botswana’s total mineral revenues for 2017/2018 are expected to increase by over 50%. Total revenues and grants for 2018/2019 are estimated at P64.28 billion and mineral revenue is expected to emerge as the largest contributor to revenues at P24.59 billion, or 38.3% of the total.