Windhoek: The ongoing conflict in the Middle East involving the United States, Israel, and Iran continues unabated, with several countries in the region also affected by the hostilities.
According to Namibia Press Agency, the conflict has resulted in fatalities and disruptions to oil prices and gas-related supplies. Recently, Nampa spoke to analysts and political commentators on the escalation of the conflict and its potential implications for the global economy, particularly Namibia.
The analysts assessed the possible impact on Namibia's economy and explored strategies the country could adopt should the conflict persist. They advised that Namibia should prepare proactively, similar to measures taken during past crises such as natural disasters and pandemics. They cautioned that the conflict poses broader risks to the global market beyond the oil and gas sector.
Following the 28 February attack by the United States and Israel, a large-scale offensive against Iran unfolded after weeks of military buildup. In response, Iran reportedly launched missiles targeting Israel and United States military bases in the Middle East, including installations in Qatar, Bahrain, Kuwait, and the United Arab Emirates.
Economist Omu Kakujaha-Matundu said the global economic repercussions of the attack on Iran will depend largely on the duration of the conflict and the time required to restore peace and stability in the Middle East. He told Nampa that preliminary analysis indicates that the closure of the Strait of Hormuz could lead to a 20 per cent reduction in global oil supply, potentially resulting in a significant rise in crude oil prices. He added that the impact would differ between oil-producing economies and oil-importing countries.
'Some African oil-exporting countries, such as Angola and Nigeria, could benefit from higher oil prices. For oil-importing countries such as Namibia, the impact will be felt through higher fuel prices and possible imported inflation. That will affect consumers, businesses, and public service delivery,' he said.
Matundu further noted that rising liquefied natural gas prices in Europe could adversely affect European economies. He also warned that the closure of airspace over parts of the Middle East could disrupt supply chains, with negative implications for the global economy. He advised that the Namibian government should prepare for the possibility of a cost-of-living crisis.
'The government should start rationalising its spending and cut non-essential expenditure. In doing so, it can continue providing essential services such as health and education and, where necessary, support economically vulnerable households and families,' he said.
Matundu added that the immediate direct impact of the conflict on Namibia would likely include higher fuel prices, reduced tourist volumes, and disruptions to supply chains that could delay the delivery of essential goods, services, and equipment.
Economic analyst and social activist Guvy Kavei told Nampa that the escalating conflict in the Middle East could significantly affect global markets and Namibia's economy, mainly through increased energy and financial volatility driven by rising oil prices linked to risks in the Strait of Hormuz. He said the concerns centre on the strategic Strait of Hormuz, through which about 20 per cent of global oil and gas shipments pass daily.
According to Kavei, any prolonged disruption could have widespread consequences for energy prices, supply chains, and global inflation. He noted that the resulting 'oil shock' is contributing to global inflation and complicating monetary policy decisions for central banks, including the Bank of Namibia.
'Namibia, which imports most of its refined fuel, faces rising import costs exacerbated by the conflict. This will likely lead to increased transport costs and price escalations across various sectors,' he said.
Kavei emphasised the need for Namibia to urgently address its vulnerability to external oil supply shocks by adopting strategies such as utilising strategic reserves, diversifying fuel sources, and implementing financial hedging mechanisms to enhance long-term energy security. Although fuel prices in Namibia have remained unchanged in March, Kavei said this may only provide temporary relief.
'The under-recoveries in the pricing model will accumulate and the price at the pump will inevitably rise in the coming months,' he said. He further cautioned that rising fuel prices would have wider economic implications.
'Transport costs will increase, pushing up the price of food and other consumer goods. Key industries such as mining, manufacturing, and agriculture all depend on affordable energy, which means their profitability and competitiveness could be squeezed,' he said.
Kavei added that Namibia's structural vulnerabilities require the country to shift from reactive responses to proactive planning. While reliance on fuel imports from the Gulf may have been practical under normal circumstances, he said it now represents a strategic weakness. He recommended that Namibia adopt a dual approach focused on short-term shock absorption and long-term structural reforms.
Ferdinand Uazapi Hengombe, the Independent Patriots for Change (IPC) shadow minister for industries, mines, and energy, also commented on the conflict, saying it is primarily affecting the global economy through energy markets, trade routes, and investor confidence.
'Shipping routes may be disrupted or become more expensive due to higher insurance and security costs. This affects global trade flows,' he said. According to Hengombe, Namibia, as a net importer of oil, remains highly vulnerable to global price spikes that could affect sectors such as transport, mining, fishing, and agriculture, leading to higher costs, inflationary pressures, and additional economic strain.
He said the conflict should serve as a reminder of Namibia's dependence on external energy supplies. Hengombe called for the country to reduce reliance on Middle Eastern supply chains by strengthening regional procurement agreements within the Southern African Development Community (SADC) and exploring diversified supply contracts.
He also urged the government to accelerate the development of renewable energy, highlighting Namibia's strong potential in solar and wind power. 'Expanding renewable energy generation would reduce reliance on imported fossil fuels, lower long-term electricity costs, and strengthen energy security,' he said.
Hengombe further highlighted the potential socio-economic impact on Namibian households, stressing the need for energy diversification, investment in renewable resources, sound economic governance, and the protection of vulnerable citizens. He added that, if managed strategically, the crisis could present an opportunity for Namibia to strengthen its energy independence and enhance long-term economic resilience.