A SLUMP in the diamond market would create a difficult fiscal backdrop for Namibia despite the southern African country forecasting modest growth this year.
This is according to a report by Reuters which cited the country’s finance minister Ericah Shafudah saying in a budget speech this week the economy would grow 4.5% this year and 4.7% in 2026.
That is better than last year’s estimated 3.7% growth but worse than the 5.4% growth the finance ministry had hoped for in 2025 as recently as October.
“The continued weaknesses in the diamond sector and the subsequent adverse impact on domestic activities remain a key source of vulnerability,” Shafudah said, also emphasising the importance of economic diversification.
Namibia has seen relatively strong economic growth in recent years, primarily due to investments in oil, gas and green hydrogen, though it is ranked among the worst countries globally for income inequality and unemployment, said Reuters.
The diamond sector was pummelled by a 20% fall in the average rough price index last year, a development which resulted in major stress for the industry’s largest miners, including De Beers, 85%-owned by Anglo American.
It took a R2.9bn write-down last year and cut diamond production by as much as 40% to between 20 million to 23 million carats for the 2025 financial year.
There have been some recent early signs of stabilising demand, particularly in the US. But analysts told Bloomberg News in a recent article that the more fundamental challenges facing the industry mean it will need to restructure and refocus.
“There’s not an obvious solution right now,” said Ben Davis, an analyst at RBC Capital Markets. “The whole market needs to recalibrate.”
