Namibia’s growth outlook is deteriorating for 2026. The Bank of Namibia now expects gross domestic product (GDP) to grow by 2.1%, down from its previous forecast of 2.6%, as inflation and interest rates continue to weigh on economic activity.
This new estimate appears in the latest quarterly economic report by the Institute for Public Policy Research (IPPR), covering the period from July to September 2026.
Despite this cautious outlook, the Namibian economy recorded a strong performance in the second quarter, with growth of 4.8%. This marks the 21st consecutive quarter of expansion since the economic recovery began in the first quarter of 2021.
The Central Bank nevertheless forecasts a gradual acceleration in economic activity over the coming years, with growth expected to reach 2.8% in 2027 and 3.2% in 2028.
The downward revision follows a difficult year in 2025. Economic growth reached only 1.7%, compared with 3.8% in 2024.
This weak performance is notably explained by declining diamond and gold production, as well as difficulties encountered in several sectors. Services and construction nevertheless continued to support economic activity.
Services thus held a dominant position in Namibia’s economy in 2025, accounting for 55.1% of economic activity, compared with 21% for primary sectors and 14.9% for secondary sectors.
Several sectors recorded positive growth, including construction, agriculture, electricity and water production, information and communication technologies, trade, healthcare, education and public administration.
Conversely, manufacturing, mining activities and livestock farming experienced contractions.
Inflation Under Scrutiny
Price developments are now one of the main concerns. Inflation reached 5% in August 2026, compared with 4.4% in South Africa, mainly driven by rising fuel prices.
Faced with inflationary pressures, the Bank of Namibia raised its key interest rate by 25 basis points to 6.75% in June, ending three years without an increase. The rate was subsequently maintained at its August meeting.
Despite the difficulties, some financial indicators remain reassuring. Foreign exchange reserves reached 51.8 billion Namibian dollars at the end of the second quarter, equivalent to 3.2 months of imports, above the three-month benchmark.
The banking sector is also showing improvement. The non-performing loan ratio of commercial banks fell to 4.2% in the first quarter of 2026, while lending to households, particularly mortgage loans, remained broadly stable.
Private investment, however, declined slightly in 2025, following the high levels recorded in 2023 and 2024, notably thanks to the expansion of oil and gas exploration activities. Non-mining private investment nevertheless increased from 7.4% to 7.8% of GDP.
According to data from the Namibia Statistics Agency, growth reached 4.8% year-on-year in the second quarter of 2026. However, this performance did not lead the Bank of Namibia to raise its annual forecast, which remained at 2.1%.
The evolution of Namibia’s economy over the coming months will notably depend on fuel price developments, the performance of the mining and services sectors, investment levels, and regional and international economic conditions.
Namibia will therefore have to contend with a paradox: economic activity that continues to show signs of short-term dynamism, but annual prospects constrained by inflationary pressures, borrowing costs and the fragility of certain key sectors.