Business Reporter
NAMIBIA’S economic growth is projected to decelerate in 2025 before regaining momentum in 2026, as weaker activity in the manufacturing and primary industries constrains overall output.
Real GDP growth is expected to moderate to 3.0% in 2025, from 3.7% in 2024, reflecting subdued performance across key industrial sectors.
This is according to the Bank of Namibia’s (BoN’s) Economic Outlook report for December 2025.
The central bank explained that the slowdown is primarily driven by a contraction in manufacturing, where output is estimated to decline by 4.6% in 2025 following moderate growth of 2.8% in 2024.
“This decline stems mainly from sharp contractions in the basic non-ferrous metals, meat processing and diamond processing subsectors, with the latter normalising after an exceptional performance in 2024. Similarly, activity in the primary industries is expected to remain weak, with overall output estimated to contract marginally by 0.1% in 2025, largely on account of significant declines in livestock farming and continued weakness in diamond mining. The combined effect of these developments, alongside persistent drought conditions and tepid global demand, is expected to weigh on short-term growth prospects,” the Bank of Namibia said.
Nonetheless, growth is projected to recover to 3.8% in 2026 and further to 4.3% in 2027, supported by a rebound in agriculture as rainfall conditions improve, a sustained upturn in construction and electricity generation, and stronger output from the uranium subsector.
Compared to the August 2025 Economic Outlook, the current projections represent a downward revision of 0.5 percentage points to GDP growth for 2025, reflecting a weaker outlook for the manufacturing sector, while the 2026 and 2027 forecasts were adjusted slightly downward by 0.1 and 0.2 percentage points, respectively, in line with expected moderation in external demand.
The central bank concluded that the domestic economy is vulnerable to substantial downside risks, specifically diminished diamond export earnings driven by price pressures and the rise of lab-grown alternatives, which pose a significant threat.
Furthermore, potential trade disruptions stemming from protectionist trade policies and inflationary pressures arising from ongoing global conflicts could reduce demand for Namibia’s export commodities. Moreover, the combined effects of declining SACU and diamond revenues could lead to rising debt sustainability risks, potentially necessitating expenditure rationing to restore fiscal space.
Photo: Bank of Namibia (BoN)
