The domestic economy is expected to grow faster in 2026, but the Economic Association of Namibia (EAN) has cautioned that the improvement may still fall short of changing the daily lives for many citizens.
Namibia still relies heavily on mining, agriculture, tourism and customs revenue from the Southern African Customs Union (SACU).
Over the years, growth has often been uneven, with strong performance in a few sectors but high unemployment and inequality persisting.
The country also remains vulnerable to droughts, global market changes and shifts in diamond demand.
Against this background, the Bank of Namibia expects economic growth to improve in 2026 after a slower year in 2025.
Growth is forecast to be around 3% in 2025 and to rise to 3.9% in 2026.
“This outlook assumes better performance in some sectors and a stabilising external environment,” EAN said.
However, the association cautioned that recent economic weakness has exposed long-standing structural problems. Manufacturing has been under pressure, while some primary industries have struggled due to domestic constraints and weaker demand from outside the country.
Diamond revenues, which play a major role in funding government spending, remain uncertain.
“Diamond income continues to be exposed to global market shifts and changing consumer preferences,” EAN said.
From the association’s perspective, this means the 2026 outlook looks positive on paper but remains narrow and fragile.
“Growth is still highly dependent on a few sectors, weather conditions and limited fiscal space,” EAN noted.
Inflation has been one of the few bright spots. Namibia’s headline inflation eased to 3.2% in December 2025, down from 3.4% a year earlier, according to the Namibia Statistics Agency. Slower food price increases helped ease pressure on household budgets.
“While this does not remove cost-of-living challenges, it does offer some relief to households and helps protect real incomes as the economy moves into 2026,” EAN said. But the key question remains what this level of growth really means for ordinary Namibians.
According to EAN, growth of around 3% is unlikely to create enough jobs to significantly reduce unemployment, particularly among young people.
“Much of Namibia’s growth comes from capital-intensive sectors where output can increase without hiring many workers,” the association said.
It added that unless growth is directed towards sectors such as construction, housing, tourism, agriculture, agro-processing and services, job creation will remain limited. “In simple terms, the economy can grow while unemployment stays high,” EAN said.
The association also warned that poverty reduction will be slow and uneven.
Households connected to the formal economy may see some improvement, but many low-income and informal households will continue to struggle with high food prices and weak employment prospects.
At the same time, government’s ability to expand social support is constrained.
“Fiscal pressures, especially if SACU and diamond revenues come under strain, limit the scope to meaningfully expand social programmes,” EAN said.
Looking ahead, EAN said much attention is focused on the possibility that TotalEnergies could take a Final Investment Decision on oil and gas in the second half of 2026.
Such a decision would be a strong signal of confidence in Namibia’s economy and could boost activity in engineering, logistics and professional services.
However, the association stressed that preparation is crucial. “If oil and gas is to contribute meaningfully to employment and development, Namibia must use 2026 to prepare local firms, build skills pipelines and put in place clear local content frameworks,” EAN said.
Without this groundwork, the association warned that the benefits could remain narrow and delayed. In its overall assessment, EAN said growth of around 3% is stabilising but not transformative.
“It helps keep the economy moving forward, but it is not sufficient on its own to significantly reduce unemployment or poverty,” the association said.
The real challenge for 2026, according to EAN, is not only about growing the economy, but about changing the kind of growth Namibia achieves so that it becomes more inclusive.
