Staff Writer
Namibia’s stronger-than-expected 4.8% economic growth in the second quarter is unlikely to be sustained through the rest of 2026, with Simonis Storm forecasting a sharp slowdown in the second half of the year.
In its latest macroeconomic assessment, Simonis Storm said the Q2 performance, together with an upward revision to first-quarter growth, had changed the arithmetic for the year but argued that the recovery was being driven largely by base effects, services, farming and domestic demand rather than exports.
The research firm maintained its 2026 growth forecast at 2.0%, below the Bank of Namibia’s 2.1% forecast, the World Bank’s 2.7% projection and the ministry of finance’s 3.1% budget assumption.
Simonis Storm said first-half growth of 4% means that even zero growth during the second half of the year would still result in annual growth of about 2.0%.
“Carry over is doing the work, not the momentum,” the firm said.
It said its 2% forecast implies that output during the second half would be broadly flat year-on-year, as the Q2 surge was supported by base effects and a rebound in consumption that Simonis Storm does not expect to be repeated.
The firm also pointed to several risks to the sectors that supported growth during the first half.
It said Brent crude oil was close to US$100 a barrel in early September, while higher pump prices had contributed to inflation rising to 5% in August.
Simonis Storm also noted that the South African Reserve Bank’s decision to raise its policy rate to 7.25% on September 23 had increased pressure on the Bank of Namibia, which has kept its rate at 6.75%, to consider a hike at its October Monetary Policy Committee meeting.
Such a move, the firm said, could weigh on credit growth and household consumption.
“Foot and mouth disease inside the free zone threatens livestock marketing, meat processing and beef exports,” Simonis Storm said, while warning that a strong El Niño could increase the risk of drought, lower crop production and reduced hydropower generation during the 2026/27 season.
Mining remains the key structural concern, according to the firm. Simonis Storm said mining had contracted for six consecutive quarters, reducing the sector’s contribution to GDP to 12.2%, while exports increased by only 0.3%.
“Namibia is growing without its traditional engine,” the firm said, adding that this reflected domestic resilience but also a widening external gap, with the trade deficit reaching 20.8% of GDP.
Simonis Storm expects economic growth to slow sharply in the second half of the year and considers the second-quarter performance likely to represent the peak for 2026.
The firm identified a recovery in uranium production and a final investment decision on the Venus oil project as potential sources of upside, while a prolonged foot and mouth disease export ban combined with drought could weigh on growth.
For households, Simonis Storm said the first-half rebound in spending was unlikely to continue amid 5.0% inflation, higher fuel costs and the possibility of higher interest rates.
“For businesses, consumer-facing sectors should plan for slower volume growth, while agri processors and exporters must price FMD disruption into Q4,” it said.
The firm also said faster nominal economic growth of 8.1% could improve the appearance of the public debt ratio, while noting that the public wage bill was accounting for a growing share of economic growth.
For financial markets, Simonis Storm said deposit growth of about 11.5% and banking value added growth of 10.0% supported the financial sector, although the widening external gap and the risk of monetary tightening warranted caution on longer-duration investments.
