Diamond weakens growth gains
Namibia's economy is forecast to grow by 2.1% in 2026, as a deepening slump in diamond production continues to hold back the country's broader recovery, the Bank of Namibia (BoN) has said.
The figure marks a downward revision of 0.5 percentage points from the central bank's March Economic Outlook, driven largely by a deeper-than-expected contraction in diamond mining and weaker construction activity. Growth is expected to strengthen to 2.8% in 2027 as the drag from diamonds begins to ease.
Diamonds remain the biggest weight on growth
Diamond production is expected to contract by 11.7% in 2026, following a steep 19.4% decline in 2025, and is forecast to fall by a further 12.3% in 2027.
The BoN attributed the continued weakness to subdued global demand for natural diamonds, growing competition from lab-grown alternatives and the lingering effects of international trade tariffs on luxury goods. The sector's prolonged decline has become one of the central obstacles to Namibia's broader economic recovery, offsetting gains made elsewhere in mining and services.
Metal ores compound the pressure on primary industries, with output forecast to contract by 22.7% in 2026, following a 12.2% decline in 2025, as reduced gold output and constrained zinc production amid depressed prices weigh on the sector. The contraction is expected to narrow to 5.3% in 2027.
Primary industries as a whole are expected to remain in contraction, although the pace is forecast to narrow from 7.2% in 2025 to 2.5% in 2026 and 1.7% in 2027.
Uranium and agriculture cushion the blow
Even as diamonds hold back overall growth, other parts of the economy are helping to soften the impact.
Uranium mining remains one of the strongest performers, with output forecast to grow by 7.9% in 2026 and 4.2% in 2027. The central bank said the sustained growth reflected ongoing exploration at one operation and increased production and sales at another, supported by firm international demand for uranium.
Agriculture, forestry and fishing are also expected to help offset the diamond-driven drag, forecast to grow by 3.6% in 2026 after contracting by 3.3% in 2025. The central bank attributed the improvement to a strong start to the season, supported by favourable early-season rainfall. However, expected El Niño conditions between August and October 2026 could disrupt late-season planting and reduce crop and forestry output, with effects intensifying in 2027 as the impact on yields
materialises.
Activity in other mining and quarrying, including oil and gas exploration, is expected to return to growth in 2026, expanding by 2.7% before moderating to 1.8% in 2027, supported by increased upstream activity, including production testing in the offshore oil and gas sector and the finalisation of a farm-in transaction by an international upstream company.
Construction slows, but still contributes
Secondary industries are forecast to grow by 1.1% in 2026, down from 2.1% in 2025, before accelerating to 2.7% in 2027.
Construction is expected to remain a significant source of growth despite a sharp slowdown from last year's exceptional performance. After growing by 20.2% in 2025, construction is forecast to expand by 6.5% in 2026 and 7.8% in 2027. The 2026 forecast was cut by three percentage points from the March outlook following weak first-quarter performance, when construction grew by just 1.8%.
Growth is expected to remain supported by mining-related developments, including underground expansion projects and new mine construction, as well as government-funded infrastructure projects.
Manufacturing is expected to remain in mild contraction, declining by 0.8% in 2026 before returning to growth of 1.7% in 2027. The weakness is largely linked to the near-total halt in basic non-ferrous metals processing and softer diamond processing, a further knock-on effect of the sector's troubles.
Services provide some resilience
Tertiary industries are forecast to grow by 3.6% in 2026 and 3.7% in 2027, compared with 4.2% growth in 2025.
Wholesale and retail trade is expected to remain a key driver, growing by 6.1% in 2026 and 8% in 2027. Financial and insurance services are also forecast to recover strongly, with growth of 3.6% in 2026 and 4.6% in 2027, supported by rising deposits and continued growth in long-term insurance premiums.
The economic outlook remains exposed to significant domestic and external risks, beyond the ongoing pressure from diamonds.
In the region, the outbreak of foot-and-mouth disease in neighbouring countries, particularly Botswana and South Africa, poses a risk to livestock production and export earnings.
Globally, continued geopolitical tensions and changing United States policies could increase volatility in commodity prices and exchange rates. The prolonged war in the Middle East has also contributed to the weaker outlook, with higher fuel and other input costs, shortages of imported inputs such as sulphur, and worsening
transport and logistics conditions adding further pressure on the economy.
Despite these risks, the central bank expects growth to strengthen in 2027 as manufacturing returns to positive growth, the diamond sector's contraction eases and the broader decline in primary industries narrows.
