Chamwe Kaira
Namibia’s economy grew by 1.7% in 2025, reflecting a slowdown caused by contractions in key sectors.
Simonis Storm said the figure fell short of both market expectations and its own 3.0% projection, citing “the severity of the diamond sector contraction, the depth of the livestock farming reversal, and the steeper-than-expected decline in gross fixed capital formation”.
Growth started at 2.8% in the first quarter but weakened during the year before a slight recovery in the third quarter, resulting in a lower annual outcome.
The firm said policy support and early credit growth signals show that a recovery is forming.
“The policy foundations laid in 2024 and reinforced through 2025… represent the leading indicators of a recovery that is forming but has not yet arrived,” it said.
Simonis Storm said monetary easing, changes in fiscal priorities toward infrastructure, and early signs of corporate credit growth are expected to support the economy over time.
“Historically, it takes two to three years for rate cuts and investment commitments to filter through… into measurable output. The seeds planted in 2024 and 2025 are real, but the harvest lies in 2027 and beyond,” the firm said.
It projects growth of between 2% and 2.5% in 2026, supported by a recovery in agriculture, steady uranium production, and stabilisation in the diamond sector. The services sector is expected to remain the main driver.
“The transmission lags mean the full growth dividend from current policy settings will materialise progressively through 2027–2028,” the firm said.
The report said progress in the oil and gas sector could improve the outlook if projects move to final investment decisions.
“This would transform the investment landscape and unlock a capex cycle with multiplier effects across construction, logistics, and services,” it said.
The Bank of Namibia ended 2025 with the repo rate at 6.50% after easing since 2024, maintaining an accommodative stance. The firm said the impact on households has been slow, with private consumption still declining in real terms.
“Transmission into household credit demand has been gradual and incomplete… entirely consistent with the lagged nature of monetary policy,” it said.
Inflation slowed to 3.5% in 2025, creating room for policy support, though risks remain from food prices, tariffs, and global factors.
Simonis Storm said the fiscal position remains a concern. Government borrowing rose to N$14.6 billion, or 5.4% of GDP, driven by lower Southern African Customs Union revenue and higher spending. SACU receipts still make up nearly a quarter of total income.
“Fiscal consolidation is not optional; it is urgent, but it must be sequenced carefully to avoid choking off the momentum that is building,” the firm said.
The report said high government consumption spending limits growth, while development spending may face pressure under consolidation.
National savings fell to 3.1% of GDP, pointing to continued reliance on external funding to support investment.
