Botswana is facing a significant economic downturn due to the increasing stockpile of diamonds, which reached 12 million carats by December 2025, nearly double the allowable inventory of 6.5 million carats. This oversupply is largely attributed to persistently low market prices for diamonds, which have plummeted due to heightened competition from lab-grown gems and a decline in global demand. As a result, the country's finance ministry projects an economic contraction of about 1 percent in 2025, following a 3 percent decline in the previous year. Debswana, the joint venture between Botswana and De Beers responsible for the majority of the country's diamond sales, was compelled to halt production at several mines during the previous year as the price slump negatively impacted profit margins. These low prices have caused a ripple effect in Botswana's economy, which is heavily reliant on mineral revenues that historically contribute roughly one-third of national income and three-quarters of foreign exchange receipts. With profits dwindling, the mineral revenues are expected to dramatically fall to an estimated 10.3 billion pula ($729.24 million) in 2025/26, starkly contrasting the historical average of 25.3 billion pula. Adding to the economic strain, Botswana's exports of diamonds to the United States are now subjected to a 15 percent tariff, increasing the cost for consumers and further reducing profitability for the mining sector. The situation is compounded as major diamond markets like India implement higher tariffs, which could prolong the slump in gem prices and create an even tighter financial environment for mining operations. Should mining activity decline further, it would lead to diminishing fiscal revenues from the sector, exacerbating the already precarious economic situation. In light of the growing stockpiles and economic challenges, the finance ministry has indicated that production will remain largely unchanged over the short term. This stagnation is expected to persist until inventory levels are reduced to more manageable figures, allowing for the potential resumption of increased diamond production. The ministry underscored the importance of a robust non-mining sector to mitigate the economic constraints posed by the downturn in diamond production and sales; otherwise, the country risks prolonged economic stagnation.