Chamwe Kaira
The Economic Association of Namibia (EAN) has warned that while the macroeconomic outlook for 2026 appears positive, it remains narrow and vulnerable.
The Bank of Namibia (BoN) expects economic growth to improve in 2026 after a subdued performance in 2025.
Growth is forecast at about 3% in 2025 and is expected to accelerate to 3.9% in 2026, assuming stronger sectoral performance and a more stable external environment.
However, the EAN said economic performance remains heavily dependent on a small number of sectors, favourable weather conditions and limited fiscal space.
Inflation has provided some relief. Headline inflation eased to 3.2% in December 2025 from 3.4% a year earlier, driven mainly by slower food price increases, according to the Namibia Statistics Agency’s (NSA) consumer price index.
While living costs remain high, lower inflation is expected to help protect household incomes and support consumption and investment as the economy moves into 2026.
The EAN questioned what growth of around 3% means for ordinary Namibians. It said growth at this level is unlikely to create enough jobs to significantly reduce unemployment, especially among young people.
Much of the country’s growth remains concentrated in capital-intensive sectors that generate limited employment.
Without a shift towards labour-intensive sectors such as construction and housing, tourism and hospitality, agriculture and agro-processing, and retail, logistics and services, unemployment is likely to remain high even as the economy grows, the EAN said.
The association noted that the recent slowdown has exposed long-standing weaknesses.
Manufacturing remains under pressure, while some primary industries continue to struggle due to domestic constraints and weaker external demand.
Diamond revenues, a major contributor to economic growth and government income, remain exposed to global market shifts and changing consumer preferences.
Poverty reduction is expected to remain slow and uneven. The EAN said households already integrated into the formal economy may see some improvement, while low-income and informal households are likely to continue facing high food prices, limited income opportunities and weak employment prospects.
“At the same time, government’s capacity to expand social programmes remains constrained by fiscal pressures, particularly if SACU and diamond revenues weaken,” the EAN noted.
Looking ahead, the association highlighted the importance of a possible final investment decision by TotalEnergies on Namibia’s oil and gas prospects, expected to be considered in the second half of 2026.
Such a decision would signal investor confidence and support preparatory activity across engineering, logistics, professional services and supply chains.
The EAN said readiness will be key. To ensure oil and gas development contributes to employment and long-term growth, the country must prepare local firms for supply-chain participation, develop relevant skills, implement workable local content frameworks and strengthen the institutions responsible for managing revenues and long-term investment.
Globally, economic conditions are expected to remain stable in 2026, though risks persist.
The International Monetary Fund (IMF) projects global growth of about 3.3% in 2026, alongside easing inflation. This suggests the global economy has moved out of crisis mode, supported by moderating interest rates and steady demand.
However, the IMF has cautioned that uncertainty remains high due to trade tensions, geopolitical risks and uneven growth across regions.
For Namibia, this means global conditions remain broadly supportive but fragile and vulnerable to sudden shifts.
Caption
Without a deliberate shift towards more labour-intensive sectors unemployment is likely to remain high even as the economy grows, the Economic Association of Namibia (EAN) has noted.
- Photo: Contributed
