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People walk past a jewelry store in the Diamond District of Manhattan, New York City, USA, on August 6, 2025.
Diamonds are forever, but their high prices aren’t
If you’re thinking of slipping an engagement ring on your partner’s finger this year, you may find some deals out there.
The price of all diamonds, both rough and lab-grown, has plummeted in recent years. The price of a natural, one-carat diamond dropped 26% over the last three years. The drop is even bigger for their lab-grown equivalents: a one-carat factory-made diamond now costs much less than half what it did in 2022. Since 2016, the value of these one-carat lab-grown diamonds is down 86%.
The reasons for this are clear: with prospective spouses increasingly switching to lab-grown rocks for ethical, environmental and cost purposes, there is less and less demand for natural ones. A study from The Knot last year found that more than half of couples used a lab-grown diamond on their engagement ring, and that popularity for these alternatives has increased 40% in recent years.
Wouldn’t higher demand for lab-grown rocks increase their value? Ordinarily, yes, but the manufacturers are flooding the market as they seek to capitalize on the wave of new demand for factory-made gems.
The consequences of these changes stretch beyond the industry – Botswana, the largest producer of extracted diamonds, has particularly suffered. The sector accounts for over 90% of the southern African nation’s exports, per the World Bank, and a quarter of its gross domestic product. The diamond downturn has tanked the economy, with the unemployment rate reaching nearly 28% last year.
The country’s politics has been turned upside down, too: human rights lawyer Duma Boko capitalized on this economic downturn to win last year’s election and become Botswana’s president. He ousted the Botswana Democratic Party, which had ruled for nearly 60 years. Boko had pledged to create up to half a million jobs and to spread wealth across the nation.
To better understand why the diamond industry has tanked, and the consequences of this for geopolitics, GZERO spoke to its in-house diamond expert: Eurasia Group’s Commodities Director Tim Puko. This interview is edited for length and clarity.
GZERO: Why is the diamond industry crashing?
Puko: We’ve just seen a dramatic change in what’s available and who wants it. The thought formerly was you needed thousands and thousands of years to produce these things, and only the highest levels of authenticity were acceptable. But as we’ve seen with many other commodity products, even with diamonds, there are ways to replicate that get the job done just as well for consumers. And so you have this whole growth of lab-grown diamonds. That’s led the price down pretty precipitously.
GZERO: Which countries are worst affected?
Botswana is far and above the most affected. Russia and Angola, and some of Botswana’s neighbors in sub-Saharan Africa also make the list. But there’s nowhere that the amount of diamond sales, the revenue, matters quite as much as Botswana. Russia is a big diamond seller, but it just doesn’t compare to their oil industry. Botswana is kind of a one-industry country, right? It doesn’t have the alternatives for its economy. And so, even though Botswana has a pretty good reputation as being a place where diamonds are pretty ethically produced, if the whole market is going to crash like this, it’s a big, broad threat to Botswana on the whole.
GZERO: What are the political ramifications of the diamond price collapse?
We’ve already seen once-in-a-generation turnover of political power in Botswana. Even the new government – it still feels like their power is tenuous, because the economic downturn and political unrest around it has been so intense.
What’s more, Botswana had been the most stable, certainly the richest of all the sub-Saharan African countries, and a source of stability for the region. Botswana, in many cases, has been providing security forces in other countries that have had coups or destabilized events of one type or another. But if the number one source of its economic growth is gone, they’re just not going to be spending externally. How destabilizing is that for its neighbors that can’t count on Botswana’s help? And they’re not the only ones in the region facing problems like this. It might be the most intense for them, but the DRC has perpetual conflict on its eastern flank, a lot of that is related to copper and gold. This is a story that a lot of the neighbors in that region of the world are experiencing right now.
GZERO: Is it possible for diamond prices to recover? Or are diamonds no longer forever?
I always say the commodity cycle is undefeated, and all these things are cyclical, but the deck is really stacked against diamonds right now. And if you think about the direction that the world is heading on forces that have nothing to do with diamonds – world trade, inflation and interest rates, cost-of-living crises, the friction that’s happening around the world, often led by the richest countries – it trickles down to everyone and so many of the policies that, especially the protectionist policies that the United States and some of its peers have been exploring, make the world more expensive for everybody. And if the rich people in these rich countries, who used to be the number one source of demand for these diamonds, feel economic insecurity themselves, paired with ethical concerns that are predominant, will they value this type of luxury item? I’m not going to call the death of the diamond market forever, but for the foreseeable future, I don’t know what the saving grace would be for conventional diamonds and the countries that mine them.
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