UPDATE 1-Botswana GDP contracts by 20.3 pct y/y in Q1 2009

* GDP weighed by fall in mining output

* Exports of goods and services decrease.

(Adds details, background)

GABORONE, July 10 (Reuters) - Botswana's gross domestic product declined by 20.3 percent in the first quarter of 2009 compared with the same period last year as mining output fell, the Central Statistics Office (CSO) said on Friday.

The global slowdown has slashed demand for the southern African country's main produce, diamonds, and rating agencies say it faces deep contraction over the next two years.

"(The) mining and quarrying industry contributed most to the decline at 68.6 percent ... Water and electricity industry also recorded a decrease of 4.0 percent during the first quarter of 2009 compared with the first quarter of 2008," the CSO said.

It said the decrease was mainly due to a fall in the consumption of electricity by the diamond industry.

Real exports of goods and services decreased by 67.0 percent during the first quarter of 2009 compared with a decrease of 18.2 percent registered in fourth quarter of 2008 while real imports of goods and services decreased by 8.4 percent.

On Monday, Botswana's central bank said business confidence in the southern African country had fallen sharply as the effects of the global economic and financial crises weighed on domestic output.

A survey of 100 businesses from sectors including agriculture, mining, manufacturing and construction showed that while the immediate impact was concentrated in diamond mining in particular, other sectors had also been affected.

Debswana, a 50/50 joint venture between the government and De Beers, decided in February to shut diamond operations until April 14 and has suspended production at two mines for the rest of the year.

The central bank said on Monday however that expectations were still for positive GDP growth of 2.8 percent in 2008/09 and 2.6 percent in 2009/10. (Reporting by Moabi Phia; Editing by Victoria Main)