Finance Minister revises economic growth to 3.3%, cuts growth forecast

Finance and Social Grant Management Minister Erica Shafudah (Photo contributed)

Finance Minister Ericah Shafudah has tabled the 2025 Mid-Term Budget Review in Parliament on Tuesday, 21 October,  painting a cautious picture of Namibia’s fiscal and economic outlook as growth slows and public debt rises.

The review projects economic growth of 3.3% for 2025, a notable downward revision from the 4.5% forecast announced during the main budget in March. The decline is attributed primarily to weakened performance in the manufacturing sector, where diamond processing, cement production, and blister copper output have all contracted.

“If left unattended, the worsening trend is highly undesirable and will lead to serious deterioration of key fiscal anchors such as the debt-to-GDP ratio,” Shafudah warned.

The Mid-Term Budget and Medium-Term Policy Statement were developed against the backdrop of persistent revenue shortfalls, increasing public debt and debt servicing costs, and growing demands for funding under the National Development Plan. Despite these pressures, the government intends to maintain the overall appropriation amount of N$89.4 billion for the 2025–2026 financial year, reallocating funds from low-performing projects to priority areas such as infrastructure, education, and health.

According to the Finance Ministry, globally, the International Monetary Fund’s October 2025 Outlook projects economic growth to fall from 3.3% in 2024 to 3.2% in 2025, with developed economies expected to expand at only 1.5%, while emerging markets may grow slightly above 4%. The IMF also warns that global public debt could surpass 100% of GDP by 2029, underscoring the need for countries like Namibia to exercise fiscal restraint and enhance spending efficiency.

Meanwhile, regionally, sub-Saharan Africa is expected to post 4.1% growth in 2025, buoyed by recovery in Nigeria’s oil sector and renewed investor confidence.

Moreover, domestically, Namibia’s primary sector—particularly uranium and other mining activities—is expected to perform better, growing 2.5% this year compared to 1.8% in 2024. The tertiary industry, however, is forecast to moderate to 3.7%, down from 4.9% the previous year.

In a positive move, the Bank of Namibia recently lowered the repo rate by 25 basis points to 6.5% to stimulate domestic activity and maintain currency stability.

Shafudah reaffirmed the government’s commitment to prudent fiscal management, inclusive growth, and long-term financial stability, emphasizing that efficiency, not expansion, must drive future spending.

“By redirecting funds towards growth-enhancing sectors such as education and infrastructure, it is possible to foster sustainable development,” she added.

With fiscal challenges mounting and economic headwinds persisting, Namibia’s Mid-Term Budget Review serves as both a reality check and a roadmap—aimed at balancing short-term pressures with long-term stability.