Namibia’s economy lost momentum in 2025 as global risks continued to weigh on growth, the Bank of Namibia (BoN) has said.
Launching the central bank’s latest annual report, Governor Ebson Uanguta said the global economy remained stable during the year, but warned that pressures are building.
“Global growth remained steady at 3.3% in 2025, the same as in 2024, supported by investment in technology, supportive policies and resilient private sector activity,” he said.
However, he cautioned that the outlook is becoming more uncertain. Global growth is expected to slow slightly to 3.2% by 2027 as high public debt and geopolitical tensions begin to affect economic activity.
The report said risks to global growth remain on the downside. Trade disputes and geopolitical conflicts could disrupt supply chains and push up costs, while rising government debt may lead to higher interest rates and tighter financial conditions.
Global inflation eased during the year.
“Global inflation declined to 4.1% in 2025 from 5.8% in 2024, mainly due to lower energy prices,” Uanguta said.
Inflation is expected to slow further to 3.8% in 2026 and 3.4% in 2027, supported by weaker demand and more stable policy conditions.
However, the central bank warned that new tensions or supply disruptions could push prices up again.
At home, economic growth slowed sharply. Real GDP growth dropped to 1.7% t in 2025, from 3.8% in 2024.
“The slowdown was mainly due to weaker performance in the primary industries. Agriculture declined due to restocking activities, while mining was affected by lower global demand for diamonds,” Uanguta said.
The secondary sector also struggled, with manufacturing contracting.
Declines were recorded in metal production, meat processing and diamond processing. Growth in construction, electricity and water helped to limit the impact.
The services sector remained steady and continued to support the economy.
“The tertiary sector recorded steady growth, driven by wholesale and retail trade, transport, communication and public services. Tourism, finance, health and hospitality also performed well,” he said.
Inflation in Namibia eased, offering some relief to consumers. Headline inflation averaged 3.5 percent in 2025, down from 4.2 percent in 2024.
“This was largely driven by lower transport inflation, supported by declining oil prices and a stronger currency,” Uanguta said. Food prices, however, remained high. Food inflation stood at 5.2 percent, limiting the overall decline in consumer prices despite a good harvest.
The report also looked at the impact of possible changes to South Africa’s inflation target, given Namibia’s link through the Common Monetary Area.
“Our analysis shows that a lower inflation target in South Africa could result in lower inflation and interest rates in Namibia over time. While this may slightly constrain growth in the short term, it would improve stability in the medium term,” he said. Uanguta stressed the importance of clear communication to manage expectations.“Strengthening communication will be key to anchoring inflation expectations and maintaining credibility,” he said.
Overall, the central bank said the outlook remains uncertain.
“While inflation is easing and the services sector is holding up, global risks and weak performance in key sectors continue to weigh on growth,” Uanguta said.