Chamwe Kaira
Namibia’s economy continues to grow, but at a slower pace. Gross domestic product expanded by 1.9% year-on-year in the third quarter of 2025, according to recent data.
Growth has remained positive, but momentum has softened compared to 2024, reflecting uneven performance across sectors and continued pressure on domestic demand.
Almandro Jansen, an economist at Simonis Storm Securities, said the third-quarter outcome points to a weaker underlying trend than first expected. This follows stronger growth of 2.8% in the first quarter and a softer performance in the second quarter.
“Economic activity is still expanding, but the pace has clearly moderated. Growth remains narrowly based, with services doing most of the heavy lifting, while investment and household demand continue to lag,” Jansen said.
Simonis Storm has maintained a cautious full-year growth forecast of about 3.0% for 2025.
Jansen said the outlook reflects both current data and deeper structural challenges, including weak capital formation and limited spillover from fiscal and monetary support into the wider economy.
Monetary policy has remained supportive. The Bank of Namibia (BoN) cut the repo rate by a total of 50 basis points in 2025, bringing it to 6.50% by October, in line with regional trends.
Commercial banks were also directed to reduce prime lending rates in September and December.
Lower interest rates have eased some pressure, but Jansen said credit uptake remains uneven. Corporate borrowing has held up, while household credit demand remains weak due to inflation and slow real income growth.
Inflation is expected to average between 3.8% and 4.0% in 2025, staying within the central bank’s target range.
However, food prices, administered costs and energy pressures continue to reduce household purchasing power and slow the recovery in consumption.
Fiscal policy remains focused on infrastructure, but execution has been weak. The government allocated about N$4.3 billion to construction, energy, water and logistics projects aimed at easing structural constraints. Delays in procurement and limited implementation capacity have reduced the impact on growth.
Data from the Namibia Planning Commission (NPC) shows that only 48% of the N$11.8 billion development budget had been spent by late 2025.
Jansen said this has weakened the impact of fiscal spending, with operational costs taking up a large share of total expenditure.
“Growth requires projects and infrastructure, not merely expenditure,” he said.
“Recurrent spending stabilises the economy, but it does little to expand productive capacity. Well-executed development spending has far higher spillover effects.”
Tourism is expected to grow by about 5.5% in 2025, generating an estimated N$4.6 billion in revenue.
Growth is supported by targeted marketing and improved international connectivity, with hotels and restaurants expected to exceed pre-pandemic levels.
If employment conditions and external demand remain supportive, we expect retail trade, which grew by 5.5% year-on-year in the third quarter, to remain resilient.
Agriculture shows a more positive near-term outlook. Forecasts of above-normal rainfall linked to La Niña conditions are expected to support activity into late 2025 and 2026.
Better grazing and crop yields should allow a gradual recovery in livestock marketing, supporting meat processing and logistics.
Goods-producing sectors remain under pressure. Manufacturing continues to face weak downstream integration and limited scale.
Construction activity has support from public and housing projects, but delivery risks and cautious private investment persist.
Mining presents a mixed picture. Uranium continues to support growth and export earnings due to strong global demand linked to the nuclear energy transition.
Diamonds and base metals remain under pressure from weaker global demand and price volatility.
Oil and gas prospects in the Orange Basin remain important, but the sector is still in the appraisal phase.
Recent delays and write-downs highlight long lead times and execution risks, with future gains dependent on large-scale infrastructure investment and policy clarity.
“Growth of around 3.0% remains achievable this year, supported by services, tourism and external demand, with upside potential from agriculture,” Jansen said. “However, weak investment, high unemployment and rising living costs limit the scope for broad-based acceleration.”
Caption
Almandro Jansen
