Inflation, growth move in tandem
Namibia’s economy is growing more strongly, but higher transport costs are pushing inflation higher and adding pressure to households and businesses.
Annual inflation accelerated to 5% in August, from 4.4% in July, according to the Bank of Namibia’s (BoN) September 2026 Quarterly Bulletin.
Transport was the main driver of the increase, with transport inflation reaching its highest level since January 2024 as higher oil prices pushed up fuel and other transport costs.
Higher transport costs also fed through to the prices of food and other goods as distribution costs increased.The rise in inflation comes against a stronger economic backdrop. Namibia’s real gross domestic product (GDP) grew by 4.8% year-on-year in the second quarter, up from a revised 3.1% in the first quarter and 1.7% in the same period of 2025. It was the strongest quarterly growth since the first quarter of 2024.
The expansion was led by the services sector, with health, wholesale and retail trade, information and communication, and financial services among the strongest performers. Agriculture also recorded robust growth, supported by favourable rainfall and a recovery in livestock numbers, while fishing activity expanded.
Growth was weaker elsewhere. Mining remained in contraction and construction declined, although manufacturing recorded moderate growth as diamond cutting and polishing recovered.
Price pressures return
Inflation remains well below the levels recorded during the global inflation surge of 2022 and 2023. The latest figures mark a reversal from the relatively subdued price growth seen earlier this year. Average annual inflation rose to 3.9% in the second quarter, from 2.5% in the first quarter. The central bank attributed the quarterly increase mainly to higher transport costs following the rise in oil prices.
The August figures suggest that the impact of higher fuel and transport costs is continuing to work through the economy. For households, higher transport costs raise the cost of commuting and travel while also increasing the cost of getting food and other goods to consumers. For businesses, higher fuel and logistics costs can squeeze profit margins or be passed on through higher prices.
Growth offers some support
The stronger economic expansion provides some support for households, businesses and government finances. Fixed capital formation grew by more than 14% in the second quarter, while government and household consumption also recorded firm growth. Private-sector credit extension increased to 4.5%, from 4.3% in the previous quarter, reflecting stronger borrowing by households and companies.
Broad money growth also accelerated during the quarter. Government debt reached N$181.9 billion, equivalent to 65.1% of GDP, at the end of June. Namibia’s current-account deficit also widened to N$12.1 billion in the second quarter, from N$10.7 billion in the first quarter and N$5.3 billion a year earlier. The government expects its budget deficit to narrow from 6.6% of GDP in 2025/26 to 5.5% in 2026/27 and eventually to 3.3% by 2028/29.
