Eswatini: Economic Outline

Economic Indicators

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In April 2018, 50 years after independence from British rule, King Mswati III changed the country’s name from Swaziland to the Kingdom of Eswatini, its pre-colonial original name. As a landlocked territory surrounded by South Africa and Mozambique, Eswatini’s economy relies largely on South Africa and on the volatile and declining Southern Africa Customs Union (SACU) revenue. The country's economic growth was already slowing when it entered recession in 2020 due to the outbreak of the Covid-19 pandemic. Real GDP growth experienced a strong rebound of 7.9% in 2021; however, in 2022, growth came to a standstill (at 0.4%) due to the lingering impact of civil unrest, delayed government payments, sluggish growth in South Africa, and unfavourable weather conditions and strikes in the sugar industry. The outlook for the near future appears positive: according to the IMF, real GDP growth is expected to increase to 3.2% this year and 2.1% in 2024, driven by agricultural output and manufacturing, as well as increased government capital expenditure.

Similarly to Lesotho, Eswatini faces significant volatility in its fiscal revenues, owing to highly unstable Southern African Customs Union receipts (the government depends on custom duties from SACU to finance almost half of its budget). Due to decreased SACU earnings and increased government expenditures, the fiscal deficit of the government expanded to an estimated 5.4% of GDP by the end of the fiscal year 2022-23. Additionally, the current account balance has shifted to an anticipated deficit of roughly 1.1% of GDP in the balance of payments, primarily due to elevated import costs having a negative effect on the trade balance. As a result, foreign reserves have decreased to USD 449 million, which corresponds to roughly 2.3 months of import coverage. SACU revenue transfers are expected to roughly double in FY23-24, facilitating a significant reduction in the fiscal deficit and a modest reduction in the ratio of public debt to GDP, which stood at 45.8% in 2022 and should decrease to 44.1% in 2023 and 41.3% in 2024 (IMF). The government is working to establish a SACU revenue stabilization fund, which may represent a substantial advancement in the administration of fluctuations in SACU revenue transfers and the improvement of macroeconomic governance. Meanwhile, headline inflation rose to 5.6% at end-2022 due to higher food and transport prices, and is expected to stabilize at around 5% over the forecast horizon (IMF). Other government priorities include the implementation of a fiscal consolidation plan, as well as boosting infrastructure, agriculture production, and economic diversification while reducing poverty. Eswatini is seeking a comprehensive industrial policy to support diversification, develop local entrepreneurs (the government has implemented initiatives to develop and promote indigenous entrepreneurship, particularly in small and medium enterprises), and promote industrialisation across the country. Nevertheless, the presence of potential risks remains, including unpredictable shifts in international commodity prices, more stringent global financial conditions, climate vulnerability (drought), lack of technological readiness, and a deceleration in South African economic expansion.

Popular discontent over poor economic conditions has been increasing. Poverty levels stagnated at high levels in the last five years. A total of 60% of the population is poor overall and children, the elderly, the unemployed as well as female-headed and single-headed households are the most affected (World Bank). Income inequality is high and unemployment concerned 24.6% of the population in 2021 (World Bank modelled ILO estimate). Youth unemployment is extremely high, at an estimated 50%. The country’s GDP per capita (PPP) stood at USD 11,054 in 2022 (IMF). Over one-quarter of Eswatini's population is infected with HIV/AIDS, the highest prevalence rate in the world (CIA).

Monetary Indicators	2016	2017	2018	2019	2020
Swaziland Lilangeni (SZL) - Average Annual Exchange Rate For 1 GHS	3.69	3.06	2.89	2.83	2.95

Source: World Bank - Latest available data.

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Latest Update: November 2023