- Producer Price Index fell 3.1% in Q2, with sharp declines in diamond polishing
- Mining gains in gold, salt and uranium helped soften the blow
WINDHOEK, NAMIBIA – Namibia’s Producer Price Index (PPI) slipped in the second quarter of 2025, reflecting deflationary pressures across key sectors of the economy, the Namibia Statistics Agency said on Wednesday.
The index dropped 3.1% quarter-on-quarter and 2.5% year-on-year. Manufacturing recorded the steepest fall at 9.3% compared to the previous quarter, while on an annual basis, a 5.1% drop in mining and quarrying output drove the decline.
The PPI tracks the prices Namibian producers receive for goods sold locally and abroad.
Diamonds drag economy down
Diamond cutting and polishing, one of Namibia’s most strategic industries, plunged 40.5% quarter-on-quarter and 6.8% year-on-year, the report showed. The fall is likely to ripple through state finances, with diamond tax collections projected to shrink to just $225 million in 2025.
Diamonds account for more than 20% of Namibia’s exports and at least 10% of GDP. The slump underscores pressure on fiscal stability and economic resilience in the southern African country.
Non-metallic mineral products such as cement also fell sharply, down 29.9% from the previous quarter and 16.9% annually, raising concerns about construction activity and domestic demand.
Despite the slump in manufacturing, mining and quarrying showed modest resilience. The index rose 4.5% quarter-on-quarter, driven by salt (+29%), gold (+16%) and uranium (+8.8%). Year-on-year, salt surged 6.8% and gold 63%, though uranium was down 10.9%.
Electricity generation, transmission and distribution prices held steady, recording no growth since late 2024. Water collection and supply showed mixed trends, falling 0.1% quarterly but rising 1% annually.
Growth outlook remains fragile
The report comes as Namibia’s broader economy slows. GDP expanded 2.7% in the first quarter of 2025, while the Bank of Namibia cut its growth forecast for the year to 3.5% from 3.8%. Consumer prices followed the downward trend, with inflation easing to 3.5% in July from 3.7% in June.
Analysts say the PPI decline signals easing inflationary pressure at the producer level, which could support monetary stability. But the depth of the manufacturing contraction raises questions about demand and growth momentum.
“Falling producer prices are a double-edged sword,” said one economist in Windhoek. “They reduce inflationary pressure but also point to weaker industrial output, which Namibia can ill afford given its reliance on mining and manufacturing for jobs and revenue.”
