CHAMWE KAIRA
Namibia’s economy showed signs of stabilising in the first quarter of 2026, although persistent weakness in the mining sector and higher interest rates continue to pose risks to growth for the remainder of the year, according to Simonis Storm Securities.
Commenting on the country’s 2% year-on-year GDP growth for the first quarter, Simonis Storm economist Almandro Jansen said the latest figures indicate the economy has moved away from the near-stagnation recorded in the fourth quarter of 2025, but warned that the recovery remains uneven.
“The Q1 2026 GDP print of 2% is a stabilisation rather than an acceleration,” Jansen said, adding that the composition of growth points to an uneven recovery rather than broad based economic momentum.
He identified mining as the dominant downside risk, noting that the sector contracted by 12.2% during the quarter.
Diamond production declined by 18.6%, while base metals output fell by 31.2%, offsetting gains recorded in agriculture and services.
According to Jansen, mining accounts for 13.5% of Namibia’s nominal GDP, meaning prolonged weakness in the sector could prevent the economy from reaching the upper end of Simonis Storm’s projected 2% to 2.5% growth range for 2026.
He said uranium production was a notable exception, expanding by 14.6% amid strong global demand for nuclear energy, which has supported uranium prices.
However, he said a recovery in the diamond industry will depend largely on improvements in global rough diamond markets, particularly consumer demand from China.
Jansen described the return to positive gross fixed capital formation (GFCF) growth as the most significant positive development in the GDP data.
Investment grew by 3.4% in the first quarter after two consecutive years of contraction.
He said if investment growth continues through the second and third quarters, supported by planned oil and gas upstream projects, government infrastructure spending and private property development, it could strengthen Namibia’s productive capacity through 2027 and 2028.
On household spending, Jansen said private final consumption expenditure grew by a modest 1.4%, suggesting consumers are unlikely to drive stronger economic growth during the second half of the year.
He attributed this partly to the Bank of Namibia’s repo rate of 6.75%, following a 25-basis-point increase in response to oil-related inflationary pressures.
Higher borrowing costs are expected to increase mortgage repayments and reduce discretionary household spending, placing greater reliance on investment and government expenditure to support economic activity.
Despite the mixed outlook, Simonis Storm maintained its full-year economic growth forecast of between 2% and 2.3% for 2026, saying the first-quarter outcome aligns with the midpoint of that range.
Jansen said the anticipated final investment decision on the Venus offshore oil project, expected in August 2026, could provide a significant boost to investment, employment and demand for services if it proceeds as scheduled, potentially lifting economic growth towards or above the upper end of the forecast range.
However, he cautioned that a further deterioration in mining activity, combined with the impact of higher interest rates, could limit Namibia’s economic growth to around 1.8% for the year.
