Economic Outline

Economic Indicators

After years of robust growth, the Namibian economy entered into recession in 2019 and 2020, impacted by the dissipation of temporary stimuli, a drop in raw material prices, a severe drought, and then the COVID-19 pandemic. The economy returned to growth in 2021 (3.5%) and 2022 (4.6%), supported by robust diamond, gold, and uranium production, and a gradual recovery in tourism and manufacturing. Namibia’s economic growth slowed to an estimated 3.7% in 2024, down from 4.4% in 2023, mainly due to reduced mining activity and severe drought. According to the World Bank, growth is projected to rise to 3.9% in 2025 and average 4% over the medium term. The non-mineral economy is expected to strengthen, particularly in pandemic-affected sectors like tourism, while household consumption is set to remain resilient.

Namibia has experienced a period of exceptional growth masking increasing macroeconomic imbalances, a slowdown in productivity, and a decline in external competitiveness. The fiscal deficit is forecast to rise from 2.4% of GDP in FY23/24 to 3% in FY24/25, as increased spending on public wages, drought relief, and capital projects outweighs revenue gains from record SACU transfers and strong tax collection. Government spending is expected to rise modestly in 2025, including limited growth in the public wage bill. However, with SACU revenues projected to decline, the fiscal deficit is forecast to widen to 4.9% of GDP in FY2025/26. Namibia’s public debt ratio – estimated at 66.7% of GDP in 2024, from 66.1% one year earlier - is projected to decline over the forecast horizon, supported by steady economic growth and the Government’s plan to repay at least two-thirds of the USD 750 million Eurobond maturing in October 2025 using savings from its sinking fund. Meanwhile, the current account deficit widened from 14.8% of GDP in 2023 to an estimated 16% in 2024, driven by falling diamond prices and increased imports of consumer goods. The deficit is expected to stay elevated due to strong oil and gas exploration-related imports, mostly funded by FDI. Gross international reserves covered 4.5 months of imports in 2024 and are projected to remain above 3 months in 2025, though the Eurobond repayment will temporarily reduce reserves before a gradual recovery. Inflation eased below the midpoint of the central bank’s 3–6% target range, driven by slower growth in food and transport prices. It is expected to remain around 4% in 2025, though external price shocks pose a risk. As inflation stabilised, the Bank of Namibia cut its policy rate by a total of 100 basis points in four steps between July 2024 and February 2025 (data IMF).

Namibia is one of the countries with the highest inequalities: the country more than halved the poverty rate between 1993 and 2024, but poverty incidence remains relatively high for an upper-middle-income country. With moderate growth and persistent joblessness, poverty is expected to stay elevated at 19.6%—around 606,000 people—in 2025, based on the USD 2.15 per day international poverty line (2017 PPP). Namibia’s structurally high unemployment, estimated at 19.1% in 2024, is partly driven by limited private investment outside the natural resource sector, slow job creation, and skills shortages. A large share of the workforce remains engaged in low-skilled, informal sector employment (World Bank data). Overall, the country’s GDP per capita (PPP) was estimated at USD 11,730 in 2024 by the IMF.

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