WINDHOEK, Oct 23 – Namibia has cut its economic growth forecast for 2026 to 2.3% from 3.1% projected in its main budget, citing weaker-than-expected economic performance in the first half of the year, according to the finance ministry’s mid-year budget review released on Thursday.
The revised outlook reflects near-term economic weakness, although the government expects growth to recover gradually over the following three years as mining projects advance, commodity prices support export earnings and domestic consumption strengthens.
Economic growth is forecast to reach 2.6% in 2027, accelerate to 3.0% in 2028 and rise to 3.3% in 2029. The finance ministry attributed the projected recovery to mining developments, firm uranium and gold prices, and stronger consumer spending as inflation and interest rates ease.
The revised projections suggest a gradual improvement in economic activity, although the pace of recovery will depend on external demand, commodity market conditions and domestic economic pressures.
Public Debt Forecast Rises
Namibia has maintained its budget deficit forecast at 5.5% of gross domestic product for the current fiscal year, but its public debt outlook has deteriorated.
The finance ministry now expects public debt to reach 68.7% of GDP, up from the 65.2% projected in the February budget. The higher forecast points to increased pressure on the government’s debt position even as the fiscal deficit estimate remains unchanged.
The divergence between the deficit and debt projections highlights the importance of the government’s financing requirements and the broader fiscal outlook as economic growth slows.
A weaker growth trajectory can also complicate efforts to stabilise public debt, as slower expansion limits the pace at which government revenues and the overall economy can grow.
Mining and Commodity Prices Support Recovery Outlook
Mining remains central to Namibia’s medium-term growth prospects. The government expects ongoing mining projects and firm uranium and gold prices to support economic activity and export earnings.
Higher commodity prices can strengthen mining revenues and investment incentives, while new projects can contribute to production, employment and related economic activity.
However, Namibia remains exposed to fluctuations in global demand and prices across its resource sectors. Diamond markets are a particular concern as weaker demand could weigh on export receipts and mining-related economic activity.
Finance Minister Ericah Shafudah identified several risks to the outlook in a statement.
“Key risks remain muted global demand and commodity prices, especially for diamonds, high fuel prices, the anticipated El Nino and the outbreak of foot-and-mouth disease,” Shafudah said.
These risks extend beyond mining. Higher fuel prices can increase transport and production costs, while adverse weather conditions and livestock disease could affect agricultural output and rural incomes.
Growth Outlook Depends on Domestic and External Conditions
The government expects easing inflation and interest rates to support consumer spending, helping economic growth strengthen from 2027 onwards.
Lower inflation can improve household purchasing power, while reduced borrowing costs may support consumption and business investment. The extent of that support, however, will depend on how quickly financial conditions ease and whether external economic risks intensify.
For Namibia, the revised forecast presents a mixed outlook: growth is expected to recover over the medium term, but the near-term slowdown and higher projected public debt underline the challenges facing fiscal management.
The government’s ability to sustain mining investment, manage spending pressures and withstand commodity-market volatility will be important in determining whether growth reaches the projected 3.3% by 2029.
