Diamonds drag Namibia outlook lower
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The Bank of Namibia (BoN) has lowered its real gross domestic product (GDP) growth forecast for 2025 to 3.0%, down from 3.7% in 2024, citing weaker performance across key sectors, particularly a sharp slowdown in diamond-related industries and rising competition from lab-grown diamonds.
In its December 2025 Economic Outlook, the central bank highlighted significant downside risks to the domestic economy.
“The sharp decline in diamond export earnings, driven by lower prices and growing competition from laboratory-grown diamonds, poses a major threat to growth,” the BoN said.
It further warned that protectionist trade policies, ongoing global conflicts, and the resulting inflationary pressures could dampen demand for Namibia’s key export commodities.
The central bank also flagged rising fiscal risks, noting that a combined decline in Southern African Customs Union (SACU) receipts and diamond revenue may erode fiscal buffers and increase debt sustainability concerns, potentially forcing the government to implement expenditure rationing.
According to the BoN, growth is expected to be dragged lower primarily by a contraction in manufacturing output, which it now forecasts to shrink by 4.6% in 2025, following a 2.8% expansion in 2024. The downturn is largely attributed to sharp declines in diamond processing, basic non-ferrous metal production, and meat processing.
Activity in primary industries is also projected to remain subdued, with overall output expected to contract marginally by 0.1% in 2025. This reflects continued weakness in diamond mining and a significant drop in livestock farming, exacerbated by persistent drought conditions.
“The combined impact of tepid global demand, prolonged drought, and structural challenges in key industries will continue to weigh on Namibia’s short-term growth prospects,” the central bank said.
The Bank of Namibia (BoN) has lowered its real gross domestic product (GDP) growth forecast for 2025 to 3.0%, down from 3.7% in 2024, citing weaker performance across key sectors, particularly a sharp slowdown in diamond-related industries and rising competition from lab-grown diamonds.
In its December 2025 Economic Outlook, the central bank highlighted significant downside risks to the domestic economy.
“The sharp decline in diamond export earnings, driven by lower prices and growing competition from laboratory-grown diamonds, poses a major threat to growth,” the BoN said.
It further warned that protectionist trade policies, ongoing global conflicts, and the resulting inflationary pressures could dampen demand for Namibia’s key export commodities.
The central bank also flagged rising fiscal risks, noting that a combined decline in Southern African Customs Union (SACU) receipts and diamond revenue may erode fiscal buffers and increase debt sustainability concerns, potentially forcing the government to implement expenditure rationing.
According to the BoN, growth is expected to be dragged lower primarily by a contraction in manufacturing output, which it now forecasts to shrink by 4.6% in 2025, following a 2.8% expansion in 2024. The downturn is largely attributed to sharp declines in diamond processing, basic non-ferrous metal production, and meat processing.
Activity in primary industries is also projected to remain subdued, with overall output expected to contract marginally by 0.1% in 2025. This reflects continued weakness in diamond mining and a significant drop in livestock farming, exacerbated by persistent drought conditions.
“The combined impact of tepid global demand, prolonged drought, and structural challenges in key industries will continue to weigh on Namibia’s short-term growth prospects,” the central bank said.
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