BoN says economy grew 4.8% in second quarter

CHAMWE KAIRA

The country’s economy expanded by 4.8% year-on-year in the second quarter of 2026, accelerating from 3.1% in the first quarter and 1.7% recorded in the same quarter of 2025.

According to the latest domestic economic developments, the stronger performance was mainly driven by the tertiary industry, particularly health, wholesale and retail trade, information and communication, and financial services.

Agriculture also recorded strong growth during the quarter, supported by favourable rainfall and a recovery in the national herd. Fishing activity expanded, while mining output remained in negative territory.

The secondary industry slowed during the period, mainly due to a decline in construction, which offset moderate growth in manufacturing. Diamond cutting and polishing activity recovered during the quarter.

On the expenditure side, real fixed capital formation grew at a double-digit pace, while government and household consumption expenditure also recorded firm growth.

Inflation, however, increased during the quarter, with headline inflation averaging 3.9%, compared with 2.5% in the preceding quarter.

The increase was mainly driven by transport inflation following higher oil prices, which pushed up fuel pump prices and increased transportation costs for food and other products.

Commercial banks also recorded higher cash holdings during the quarter, driven by diamond sale proceeds, government expenditure and investment flows.

Meanwhile, government debt continued to rise. Total central government debt reached N$181.9 billion at the end of June 2026, representing annual growth of 6.1%.

The increase was mainly driven by higher issuance of Treasury Bills and Internal Registered Stock. Government debt stood at 65.1% of GDP at the end of June, up from 63.9% during the corresponding period of the previous fiscal year.

Total government debt is projected to average about 67% of GDP over the Medium-Term Expenditure Framework period.

Government loan guarantees, however, declined to 2.5% of GDP, down 0.6 percentage points year-on-year and well below the government ceiling of 10% of GDP.

Namibia’s current account deficit widened during the second quarter to N$12.1 billion, compared with N$10.7 billion in the preceding quarter and N$5.3 billion in the corresponding quarter of 2025.

The deterioration was mainly attributed to a wider merchandise trade deficit and higher services payments.

Foreign reserves, meanwhile, increased by 9 % during the quarter to N$56.4 billion at the end of June. This represented an estimated import cover of 3.5 months, up from 3.2 months in March.

Excluding imports related to oil exploration and appraisal activities, the import cover was estimated at 3.9 months, remaining above the international benchmark of three months.

The Real Effective Exchange Rate appreciated by 4.1% year-on-year, reflecting higher domestic inflation relative to Namibia’s trading partners and indicating a moderate decline in the international competitiveness of Namibian products.