Chamwe Kaira
Monetary policy in Namibia is expected to remain cautiously supportive in 2026 as the Bank of Namibia continues with a data-driven approach after easing interest rates in 2024 and 2025.
Inflation remains contained and domestic demand is recovering at a slow pace. The central bank is expected to support growth while protecting external stability and the currency peg.
Simonis Storm said in its 2026 economic outlook that after cumulative rate cuts brought the repo rate to about 6.50% by late 2025, there is room for further easing. The firm expects up to two additional cuts of 25 basis points each in 2026, if inflation remains within target and the interest-rate gap with South Africa stays appropriate.
The repo rate is projected to average between 6.00% and 6.25% in 2026. This would keep real interest rates positive in a low-to-mid single-digit inflation environment.
Simonis said the cautious stance reflects fiscal pressures, uncertainty around Southern African Customs Union revenues and global financial volatility. Borrowing costs have fallen from the 2023–2024 tightening cycle. However, the firm said lower rates alone are unlikely to drive a broad increase in demand due to high unemployment and pressure on household finances.
Inflation is expected to average between 3.5% and 4.0% in 2026, in line with the central bank’s projections.
“Disinflation has been supported by stabilising food prices following improved rainfall, subdued global fuel costs, and stable exchange-rate conditions under the currency peg. Agricultural recovery from late 2025 into 2026 is also expected to ease pressure on meat, grain, and fresh produce prices.”
The outlook warns of risks. Oil price volatility linked to geopolitical tensions could push inflation higher. Climate shocks may disrupt domestic food supply. A weaker South African rand could raise imported inflation in Namibia and influence monetary policy decisions.
Liquidity conditions are expected to remain stable. Broad money supply growth is projected at about 6.5% to 7.0% in 2026, in line with nominal economic growth.
Private Sector Credit Extension is forecast to grow between 4.5% and 5.5% year on year in 2026. Corporate lending is expected to lead growth, driven by investment in infrastructure, energy, logistics and selected service industries. Construction, renewable energy, mining services, transport and export-focused businesses are likely to benefit from lower rates, especially where projects are backed by long-term contracts or policy support.
Household credit growth is expected to remain weak due to unemployment, high debt levels and cautious spending.
“Although lower interest rates improve borrowing affordability marginally, commercial banks are expected to maintain conservative lending standards and prioritise asset quality over rapid loan book expansion,” Simonis said.
The firm said possible investment decisions in oil, gas and green hydrogen projects could lift corporate credit demand in the second half of 2026. Any increase in credit is likely to remain concentrated among large firms rather than spreading across the wider economy.
