An IMF mission led by Xiangming Li visited Windhoek from March 16 to 20 to assess economic developments. In a statement at the conclusion of the visit, Li said Namibia’s real gross domestic product (GDP) growth slowed significantly to 1.7% in 2025, reflecting weak diamond demand and continued livestock rebuilding following the 2024 drought.
Growth is expected to remain subdued in 2026, partly due to higher fuel costs and reduced global demand linked to the ongoing Middle East conflict.
Inflation eased during 2025 and continued to decline early this year, reaching 2.4% year on year in February 2026. However, the IMF cautioned that rising fuel prices are likely to push inflation higher over the course of the year.
Namibia’s external position improved modestly in 2025, with the current account deficit narrowing from 15.2% of GDP in 2024 to 13.2%. Stronger uranium and gold exports helped offset lower Southern African Customs Union revenues and ongoing weakness in the diamond sector.
The Fund expects the deficit to remain large due to foreign direct investment-related imports for oil exploration and mining projects.
Gross foreign exchange reserves declined following the repayment of a $750 million Eurobond in October 2025, leaving reserve cover at 3.5 months of imports at the end of the year.
The IMF identified the Middle East conflict as a major downside risk, citing potential further weakening of global demand, increased commodity price volatility, especially for fuel and fertiliser, and tighter financial conditions. Continued weak demand for natural diamonds could further delay recovery.
On fiscal policy, the Fund said the FY25/26 deficit widened sharply due to a steep fall in Southern African Customs Union revenues. The FY26/27 budget appropriately targets consolidation through reforms to the public service medical aid scheme, cuts to transfers to public enterprises and tighter control of goods and services spending.
The Bank of Namibia kept its policy rate at 6.5% in February, maintaining a 25‑basis‑point gap with the South African Reserve Bank. The IMF advised close monitoring of global risks to protect the currency peg and reserves.
The Fund said structural reforms remain critical to diversify the economy, boost job creation and strengthen long‑term resilience.
–IMF/ChannelAfrica–
