CHAMWE KAIRA
Namibia’s diamond industry is facing another sharp contraction, with the Bank of Namibia warning that weak global demand, growing competition from lab-grown diamonds and trade tariffs are deepening what it describes as a structural decline in the sector.
The central bank expects diamond mining output to fall by 11.7% in 2026, following a 19.4% contraction last year. The 2026 forecast was revised down by six percentage points from the March economic outlook.
The outlook remains weak in 2027, with diamond production projected to contract by a further 12.3%.
“The continued weakness reflects persistently subdued global demand for natural diamonds, intensifying competition from lab-grown alternatives, and the lingering effects of international trade tariffs on the luxury goods segment,” the bank said in its economic outlook for August released on Monday.
It said the developments point to a “structural rather than cyclical” decline in the diamond industry.
The downturn is also spilling into diamond processing and the broader manufacturing sector.
Manufacturing is expected to contract by 0.8% this year, after shrinking by 2.9% in 2025, before recovering to growth of 1.7% in 2027.
The bank said manufacturing would remain under pressure in 2026 due partly to “continued softness in diamond processing in line with reduced output from the mining sector”.
The diamond slump comes as Namibia’s overall economy is expected to recover gradually after weak growth in 2025.
Real GDP growth is projected to rise from 1.7% last year to 2.1% in 2026 and 2.8% in 2027.
The recovery is expected to be driven largely by improved agricultural output following better early-season rainfall, continued strong uranium production and robust activity in wholesale and retail trade and construction.
However, primary industries are expected to remain in contraction over the forecast period.
After shrinking by 7.2% in 2025, the sector is projected to contract by 2.5% in 2026 and 1.7% in 2027.
The bank said the improvement in primary industries this year would mainly reflect a recovery in agriculture and sustained growth in uranium mining.
But this will be partly offset by a sharp deterioration in metal ore production and the continued decline in diamonds.
Metal ore output is projected to contract by 22.7% in 2026, following a 12.2% contraction in 2025, before the decline narrows to 5.3% in 2027.
Uranium remains one of the stronger performers in the mining sector, with output expected to grow by 7.9% in 2026 before slowing to 4.2% in 2027.
Agriculture, forestry and fishing is forecast to rebound by 3.6% in 2026 after contracting by 3.3% in 2025. Growth is expected to moderate to 1.9% in 2027.
Construction, another key growth driver, is expected to expand by 6.5% this year after recording exceptional growth of 20.2% in 2025. Growth is projected to accelerate to 7.8% in 2027.
Wholesale and retail trade is forecast to grow by 6.1% in 2026 and 8% in 2027.
The bank expects the broader economy to gain further momentum in 2027 as manufacturing returns to growth and the contraction in primary industries narrows.
For the diamond industry, however, the latest projections point to a prolonged downturn, with falling production and weaker processing activity expected to continue weighing on Namibia’s mining and manufacturing performance.
