Namibia's economy surges 4.8% in Q2 2026

Economic activity in Namibia accelerated to 4.8% year-on-year in the second quarter of 2026, according to the Namibia Statistics Agency. This marks an improvement from the revised 3.1% in the first quarter and 1.7% in the same period last year.

The tertiary sector remains the primary driver of growth, expanding by 6.1% year-on-year. Wholesale and retail trade, agriculture, and healthcare supported this growth.

Investment Spillovers Boost Domestic Demand

Gross Fixed Capital Formation (GFCF) accelerated to 14.4% year-on-year in the second quarter, driven by machinery and transport equipment. This investment increase is significant in Namibia, as it flows through to procurement and household income, supporting private spending and boosting tertiary sector activity.

The impact of investment on the broader economy is evident in the 11.6% increase in private consumption. However, persistent income and employment constraints, along with rising household costs, suggest that investor and project-related spending may be driving some of this growth rather than a broad improvement in household spending power.

The primary sector also improved, with agriculture and forestry expanding by 17.8% year-on-year, supported by favorable rainfall and stronger crop production. In contrast, mining contracted by 3.1% year-on-year, with weaknesses in uranium and metal ores.

The secondary sector saw marginal improvement, with manufacturing expanding by 3.9% year-on-year. However, construction sharply contracted by 15.5% year-on-year, primarily due to a 55.1% decline in real government construction expenditure.

Investment and Spending Trends

The outlook has shifted towards growth broadly in line with 2025, moving away from a structurally weaker path. This adjustment is based on the stronger second-quarter performance and upward revisions to the first quarter. The key factor in sustaining this recovery lies in the balance between investment-driven domestic production and import reliance.

Tertiary Sector Leads Growth, But Challenges Remain

The tertiary sector continues to drive growth, with strong performances in wholesale and retail trade, healthcare, financial services, and real estate. However, mining, construction, and electricity and water sectors remain structural drags.

The recovery in domestic demand is significant but partly offset by weakness in the external sector. Real exports increased by only 0.3% year-on-year, while imports surged by 12.9%, widening the external deficit to N$14.7 billion.

The near-term outlook has improved, with real GDP growth expected to range between 2.2% and 2.9% in 2026. However, risks remain tilted to the downside, with higher inflation, interest rates, and global oil prices potentially weighing on consumption and increasing the import bill.

The agricultural sector could face challenges in 2027 as El Niño intensifies. Delays in final investment decisions or a slowdown in foreign investment-related spending could also soften domestic activity.

Sectoral Performance and Investment Trends

Agriculture and forestry drove the primary sector’s improvement in the first quarter of 2026, growing by 17.8% year-on-year. Favorable rainfall, stronger crop production, and recovering livestock activity supported this.

The mining sector continued to contract by 3.1% year-on-year, with weaknesses in uranium and metal ores. Diamond mining remained marginally negative.

Diamond cutting and polishing led this, alongside gains in leather products, dairy products, and meat processing.

Construction sharply deteriorated, contracting by 15.5% year-on-year, primarily due to a 55.1% fall in real government construction expenditure.

External Sector and Outlook

The external sector remains challenging, with real exports increasing by only 0.3% year-on-year, while imports surged by 12.9%. This widened the nominal external deficit to N$14.7 billion in the second quarter of 2026.