Bank of Namibia has lowered its economic growth forecasts for 2026 and 2027, citing weaker-than-expected performance in key primary industries, particularly metals and diamond mining.
In a statement released on Monday, the central bank said it now expects the economy to grow by 2.6 percent in 2026 and 2.9 percent in 2027. The revised projections mark downward adjustments of 1.2 percentage points and 1.4 percentage points, respectively, from earlier forecasts.
“The downward revisions mainly reflect weaker-than-previously anticipated performance in the primary industries, particularly the significant contraction in metal ores production and continued weakness in diamond mining,” the bank said.
The southern African nation, rich in natural resources, has long relied on extractive industries as a backbone of its economy. However, a sustained slump in global diamond demand has weighed heavily on output, compounding challenges in the broader mining sector.
While diamond production has struggled, the bank noted that uranium mining remains a relative bright spot within the primary industries, supported by firm global demand and prices. Gold has also provided some support to the sector, helping to cushion the impact of declining diamond revenues.
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Despite the weaker outlook for mining, the central bank said growth would be partly supported by gains in the secondary and tertiary sectors. These include construction, financial services and defence, which are expected to play a more prominent role in driving economic activity over the forecast period.
“The domestic economy is projected to be primarily driven by improved performance in secondary and tertiary industries,” the bank said, pointing to ongoing infrastructure projects and resilient service-sector activity.
The revised forecasts place the central bank’s outlook below that of the government. Ministry of Finance Namibia had projected economic growth of 3.1 percent for 2026 in its annual budget presented just days before the outbreak of the Iran war 2026 in late February.
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Economists say the divergence highlights growing uncertainty around Namibia’s economic trajectory, particularly as global commodity markets remain volatile.
The central bank also flagged several downside risks that could further weigh on growth. Among them is the potential spread of foot-and-mouth disease in neighbouring Botswana and South Africa, which could disrupt regional trade and agricultural output.
In addition, the bank warned that further fluctuations in global commodity prices could have a significant impact on Namibia’s export earnings and fiscal position, given the country’s heavy reliance on mineral exports.
“The outlook remains subject to considerable uncertainty, particularly from external developments,” the statement said.
Namibia’s economic performance in recent years has been closely tied to global demand cycles for its key exports, including diamonds, uranium and gold. While higher uranium and gold prices have offered some relief, they have not been sufficient to fully offset the drag from weaker diamond markets.
Analysts note that efforts to diversify the economy away from extractive industries remain critical for long-term stability. Increased investment in manufacturing, services and infrastructure could help reduce vulnerability to commodity price shocks.
For now, however, the near-term outlook suggests a slower pace of expansion than previously anticipated, with the mining sector continuing to pose a significant challenge.
The central bank said it would continue to monitor domestic and international developments closely and adjust its projections as needed.
As Namibia navigates a complex mix of global headwinds and sector-specific challenges, policymakers face the task of sustaining growth while managing risks tied to its resource-dependent economy.
