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FNB Namibia is maintaining its 3% GDP growth forecast for 2025, betting on a cyclical rebound in agriculture and a strong recovery in the tourism sector, even after the economy slowed more than expected in the second quarter.
Namibia’s real GDP growth decelerated to 1.6% year-on-year in the second quarter, down from 2.8% in Q1 and 3.3% in the same period a year ago. FNB economist Helena Mboti noted the “downward surprise was broad-based,” with only mining reporting improved growth compared to the prior year.
Tourism and Agriculture to Anchor H2
Despite the weak Q2 print, FNB is holding firm on its full-year outlook, underpinned by optimism for the second half of the year.
The bank expects improvements in agriculture to bolster both primary output and downstream meat processing. Meanwhile, the tourism sector is projected to recover robustly, with hotels and restaurants anticipated to surpass 2019 levels during the Q3 peak season. A rebound in wholesale and retail trade is also expected, provided investment spending remains resilient.
“From 2026 onwards, low base effects will further support the rebound,” Mboti said in the bank’s GDP review. The 3% growth view is supported by the “cyclical turnaround in agriculture and manufacturing, as well as sustained optimism in the business environment, which will continue to drive demand for services and tourism.”
Household Spending Remains a Drag
On the expenditure side, a sharp decline in household consumption, which fell by 7.2% year-on-year, stood out as the primary constraint. This drag, Mboti explained, is a reflection of Namibia’s 55% unemployment rate, sticky inflation, and rising housing costs.
Other expenditure components showed resilience:
- Government spending rose 4.2%.
- Investment increased 5%.
- Net exports cushioned the overall slowdown, with exports up 18.5% and imports down 4.7%.
Mboti cautioned that if the drag from weak household demand “persists and outweighs the pull from foreign investment,” growth could decelerate to around 2.2% in 2025 before regaining momentum above 3% in the medium term.
Nonetheless, current growth remains “comfortably above the pre-pandemic average of −0.8% in 2019,” and overall business sentiment remains broadly optimistic despite evident structural weaknesses.
FNB maintains its 2026 GDP growth forecast at 3.4%. The average growth for the first half of the year now stands at 2.5%.
