Namibia faces economic squeeze as Middle East tensions rise
Geopolitical issues
Namibia is caught feeling the pressure in the aftermath of a 12-day war between Israel and Iran.
Simonis Storm has raised concerns about Namibia’s economic outlook in light of the recent 12-day stand-off between Israel and Iran, warning that a fragile ceasefire may struggle to hold.The warning follows a direct Israeli strike on Iran’s South Pars gas-processing facility - an escalation seen as a significant breach of thresholds. While the facility primarily supplies gas for domestic consumption, the move carried strong symbolic weight by targeting critical infrastructure.
“The Bank of Namibia (BoN) is now caught in a classic small open-economy dilemma,” Simonis Storm said, referring to the central bank’s policy options. “On the one hand, domestic inflation has cooled and economic growth remains weak, conditions that would normally justify interest rate cuts. On the other hand, a prolonged oil shock would widen the trade deficit, erode real disposable income, and drive higher inflation through second-round effects, particularly in logistics, food and transport.”
A further concern is the vulnerability of the Namibian dollar, which is pegged one-to-one to the South African rand, to global volatility.
“If the Namibia dollar weakens significantly, this would push up the cost of imported goods across the board, undermining any potential rebound in consumer spending. In short, the central bank may be forced to pause or delay monetary easing, even in the face of weak domestic growth, unless there is a credible and lasting de-escalation,” the firm stated.
The fallout from the Israel-Iran conflict is also putting pressure on Namibia’s strategic role as a regional logistics hub, particularly in the transportation of fuel to landlocked neighbours.
“At a regional level, the risks are not just fiscal or external,” Simonis Storm added. “Namibia’s role as a fuel and logistics corridor for Zambia, the Democratic Republic of the Congo, and parts of Botswana is now exposed to pricing and reliability risks. Rising diesel prices will strain cross-border transport margins and could divert trade flows away from Walvis Bay if cost unpredictability continues.”