Standard Bank warns of sub-2% growth without oil FID
A sharp contraction in Namibia’s primary industries drove annual economic growth down to 1.7% in 2025, a significant deceleration from the 3.8% expansion recorded in 2024. According to the latest analysis from Standard Bank Namibia, the result fell below the anticipated 2.1%, suggesting that underlying economic activity has weakened more abruptly than previously forecast.
In nominal terms, the economy grew from N$250 billion in 2024 to N$269.77 billion in 2025, though economists indicate that much of this increase was the result of price effects rather than robust real-term growth.
The final quarter of 2024 set a difficult tone for the following year, with growth contracting by 0.5% compared to a 2.6% expansion in the previous quarter. This was largely dictated by a 7.2% slump in the primary sector, reflecting severe weakness in both agriculture and mining.
While the tertiary sector remained the economy's main engine, expanding by 4.2%, and the secondary sector saw modest growth of 2.1%, the slowdown was widespread. Outside of the construction, utilities, and information communication technology (ICT) sectors, most industries experienced slower growth than in 2024, pointing to a broad-based deceleration.
Key drivers
On the demand side, indicators of domestic weakness were evident. Private consumption contracted by 11.5%, reflecting a severe squeeze on household incomes and diminished purchasing power. Simultaneously, foreign direct investment declined by 13.4%, weighing on capital formation and broader economic activity.
Government consumption remained relatively supportive, growing by 3.6% and helping to cushion the slowdown, while exports demonstrated resilience on an annual basis despite quarterly volatility and a notable decrease in imports. The primary sector proved to be the largest drag on growth throughout 2025, with both agriculture and mining underperforming.
Despite a rebound to 1.4% in the final quarter of the year, the agricultural sector recorded a weaker overall performance, contracting by 8.9% on an annual basis. This decline was largely driven by persistent weakness in livestock farming, which more than offset gains in crop farming and forestry supported by improved rainfall.
Mining remained under pressure, contracting by 28.8% in the final quarter of 2024 and marking a continuation of a seven-quarter downward trend. Diamond mining and metal ores, particularly gold production, declined significantly as they reflected weaker global demand conditions. Uranium was a notable exception with output supported by higher production levels, but this was insufficient to offset broader weakness across the sector. Additionally, reduced exploration activity in the oil and gas sector weighed on other mining and quarrying subsectors.
In the engine room
In the secondary sector, performance was mixed. Manufacturing contracted by 5.1% in the fourth quarter of 2025 and 2.8% on an annual basis, reversing the growth of 4.0% seen in 2024. The decline was broad-based, driven by lower output in basic non-ferrous metals due to plant maintenance, as well as contractions in meat processing and beverages.
Conversely, construction remained a key growth driver, expanding by 20.9% in 2025 compared to 5.3% in 2024. This was supported by sustained investment in electricity infrastructure and building activity, with the sector recording double-digit expansion across the last five quarters. Similarly, the electricity and water sector recorded strong growth of 12.9%, driven by increased domestic hydroelectric generation.
The tertiary sector continued to anchor growth although most subsectors showed signs of moderation. Wholesale and retail trade expanded by 7.8% annually, down from 9.3% in 2024, indicating a general slowdown in consumer spending.
Information and communication was the fastest-growing sector, expanding by 10.7% in 2025 as it benefited from digitalisation and rising connectivity needs. Transport and storage growth slowed significantly to 1.8%, reflecting weaker freight activity in road and air transport, though railway transport showed strength. Financial services growth moderated sharply to 0.6% from 5.9% in the previous year, aligning with reduced investment and weaker consumption.
The Namibia Statistics Agency implemented marginal revisions to prior data, with 2024 growth revised down by 0.1 percentage points and 2023 revised up by a similar margin. The downward revision in 2024 was primarily driven by weaker manufacturing and tertiary sector performance, while the upward revision to 2023 was supported by stronger performance in public administration, construction, and utilities.
Expectations
Looking ahead, Standard Bank said it expects construction and the tertiary sector to remain the main growth drivers. However, mining and consumer-facing sectors are likely to remain under pressure due to soft global demand and declining disposable incomes. Downside risks remain elevated, including the potential for a further slowdown in global growth or climate risks. Fiscal space is also becoming more constrained as the government signals a more prudent stance, suggesting public spending alone will not drive stronger growth.
Overall, without a meaningful recovery in private investment, growth is likely to remain below 2%. A sustained recovery will depend on improved investment momentum and stronger external demand. Standard Bank was also expecting growth to remain below 2% in the absence of a Final Investment Decision in the oil and gas sector.
In such a scenario, growth could be as low as 0.4% in 2026. A positive investment decision would represent a significant upside catalyst, with the potential to materially increase growth through investment and employment creation, potentially accelerating growth to 1.5% in the latter half of 2026.
