Namibia is facing renewed inflationary pressure and economic risks as escalating geopolitical tensions in the Middle East begin to ripple through global energy and trade markets, according to former Bank of Namibia Governor Johannes !Gawaxab.
The emerging risks are expected to be transmitted through higher fuel costs, rising import prices and exchange rate pressures, highlighting Namibia’s exposure to external shocks as a small, import-dependent economy.
!Gawaxab said the most immediate impact will be seen in fuel prices, with domestic pump prices projected to rise sharply.
“Domestic fuel prices are anticipated to increase by N$4.50 per litre in April 2026, significantly raising transport and logistics costs,” he said.
Higher fuel costs are expected to feed into broader inflation, as increased transport and distribution expenses push up the price of goods and services.
“Rising fuel costs and transport expenses are likely to place additional pressure on operating margins and disposable income,” !Gawaxab said.
Beyond fuel, Namibia’s agricultural sector is also expected to come under strain as fertiliser prices rise in response to global market disruptions.
“This could raise input costs for Namibian agriculture, particularly for crop production, potentially affecting food prices and rural incomes,” he said.
At the same time, disruptions to global shipping routes are likely to increase the cost and timing of imports, adding further pressure on businesses and consumers.
“Shipping and trade disruptions may translate into higher import costs and longer delivery times,” !Gawaxab said.
The combined impact of higher fuel, fertiliser and import costs is expected to reinforce inflationary trends, while also weighing on economic growth.
!Gawaxab warned that broader global developments could further compound these pressures, as energy market volatility affects economic activity.
“The energy shock is expected to reduce global GDP growth and increase inflation, which could weaken external demand and increase financial market volatility,” he said.
For Namibia, this could translate into slower growth, reduced investment sentiment and increased costs across key sectors.
Exchange rate movements are also expected to play a significant role in shaping inflation outcomes, particularly given the Namibia dollar’s peg to the South African rand.
“Depreciation against major currencies such as the US dollar can have a more significant impact on inflation than global oil price increases alone,” !Gawaxab said.
Scenario analysis suggests that a combination of elevated oil prices and a weaker exchange rate could intensify inflationary pressures in the domestic economy.
Global data shows that a sustained 10% increase in oil prices typically raises global inflation by about 0.4 percentage points while reducing economic output.
“These effects, while moderate in isolation, can compound under prolonged geopolitical stress,” he said.
!Gawaxab said the current environment underscores the need for Namibia to strengthen its economic resilience and reduce vulnerability to external shocks.
“Namibia’s economic outlook will depend on its ability to manage external shocks while strengthening domestic resilience, including securing energy supply and maintaining fiscal discipline,” he said.
He added that the intersection of geopolitical tensions with broader shifts in energy security and global economic structures will require strategic positioning to safeguard long-term stability.
“Strategic positioning in response to global shifts will be critical in mitigating risks and sustaining economic stability,” !Gawaxab said.
