Staff Writer
FNB Namibia expects the Bank of Namibia (BoN) to keep the repo rate mostly unchanged in 2026 as inflation risks, weak economic growth and exchange rate volatility continue to pressure the economy.
FNB Namibia market research manager, Mandisa Van Wyk, said the need to protect the currency peg and maintain adequate import cover limits the room for interest rate cuts, despite support for reserves from mining inflows.
“The need to safeguard the currency peg and maintain adequate import cover limits scope for easing, despite temporary support to reserves from mining-related inflows. Monetary policy is therefore likely to remain cautious, with any sustained departure from baseline conditions increasing the risk of a policy shift,” she said.
On 29 April, the Bank of Namibia’s Monetary Policy Committee decided to keep the repo rate unchanged at 6.50%, in line with market expectations.
The South African Reserve Bank also left its policy rate unchanged at 6.75% during its March 2026 meeting. This kept the interest rate difference between Namibia and South Africa at 25 basis points.
Van Wyk said FNB has revised its inflation forecasts higher to 4.2% for 2026 and 3.4% for 2027.
Namibia’s real GDP growth slowed to 1.7% in 2025 due to weaker performance in the primary sector and slower activity across the secondary and tertiary sectors.
The Bank of Namibia has revised its growth outlook downward to 2.6% for 2026 from an earlier forecast of 3.8%. The central bank now expects growth of 2.9% in 2027, down from the previous estimate of 4.3%.
The central bank said the outlook remains exposed to downside risks, including the ongoing conflict in the Middle East.
“In contrast, we hold a more cautious near-term growth outlook, at 1.2% in 2026, with a stronger rebound of 3.1% anticipated in 2027,” Van Wyk said.
FNB expects private sector credit extension growth to slow and average around 3% in 2026, mainly supported by corporate borrowing.
Van Wyk said Namibia’s international reserves remain exposed to risks linked to geopolitical tensions, which continue to weaken the South African rand and increase global financial pressures.
International reserves declined slightly to N$51.8 billion at the end of the first quarter of 2026.
The decline was mainly caused by outflows of South African rand and withdrawals of foreign currency deposits by customers.
Despite the decline, reserve levels remain stable and currently provide 3.3 months of import cover.
