Following its 2026 Article IV consultation, the IMF said growth slowed to 1.7% in 2025, largely due to continued weakness in the diamond sector, alongside slower oil exploration activity. Gains from uranium production and services provided some support, but were not enough to offset declines in key industries.
Growth is projected to rise modestly to 2.1% in 2026, with a gradual recovery toward about 3% over the medium term. However, the IMF cautioned that structural challenges, including skills mismatches, regulatory bottlenecks and a large public sector, are likely to continue weighing on productivity and job creation.
While inflation declined during 2025 due to lower global food and fuel prices, recent increases in energy costs linked to geopolitical tensions are expected to push inflation higher in the near term before stabilising.
The IMF noted that Namibia’s economy remains heavily dependent on extractive industries, limiting diversification and broad-based growth. Youth unemployment remains particularly high, and economic gains have yet to translate into meaningful improvements in living standards for many citizens.
The IMF said risks to the outlook are tilted to the downside, including global uncertainties, weaker demand for diamonds, rising public debt and climate-related shocks. Domestic risks such as disease outbreaks in livestock and volatility in regional revenue transfers could further affect growth.
However, potential upside exists through investment in emerging sectors such as oil, gas and green hydrogen, which could support diversification if managed effectively.
The IMF welcomed government efforts toward fiscal consolidation, noting that expenditure restraint and reforms are helping to support debt sustainability. It called for continued efforts to strengthen revenue collection, improve public financial management and enhance oversight of state-owned enterprises.
Looking ahead, the IMF emphasised the need for structural reforms to support private sector-led growth. Priorities include improving infrastructure, reducing regulatory barriers and aligning education and training with labour market needs.
The IMF said a more diversified and inclusive growth strategy will be critical for Namibia to generate employment and sustain long-term economic stability.
–IMF/ChannelAfrica–
