Eswatini is a landlocked country in Southern Africa bordering South Africa and Mozambique, with a population of 1.2 million. Poverty levels stagnated at high levels in the last five years, with 39.7% of the population estimated to have been living under the international $1.90 poverty line in 2016 and 2017.
Eswatini has close economic linkages to South Africa on which it depends for about 85% of its imports and about 60% of exports. Eswatini is a member of the Common Monetary Area (CMA), with Lesotho, Namibia, and South Africa. Under the CMA, the Eswatini lilangeni (the domestic currency) is pegged at par to the South African rand, which is also legal tender in the country.
Economic growth is estimated to have slowed to 0.5% in 2018 from 1.9% in 2017, constrained by fiscal challenges. Domestic arrears negatively affected private sector business particularly those that rely on government payments such as construction activities. Despite the freeze on civil service wages, election related expenditure led to slight recovery of wholesale and retail trade sector and supported modest consumption spending.
During the second half of 2018 the government instituted fiscal consolidation measures leading to marginal decline of the budget deficit. Suspension of most capital projects, a civil service wage freeze in 2018, and other fiscal consolidation measures introduced on November 22, 2018 facilitated this marginal decline. Despite these efforts, the government continued to finance fiscal deficit through accumulation of domestic arrears and partly by international reserves. Public debt increased by more than three percentage points of gross domestic product (GDP) year-on-year, reaching 23.8% of GDP in December 2018. Gross official reserves dropped to the lowest level in five years, reaching 2.8 months of import cover in December 2018 (below the three-month international benchmark). However, international reserves fluctuated throughout the year, increasing only when the country received Southern African Custom Union quarterly revenue inflows. The current account surplus narrowed, driven by lower growth of exports.
Inflation slowed in 2018, averaging 4.8% down from 6.2% in 2017, driven by lower food prices. Lower inflation rates enabled the Central Bank to maintain an accommodative monetary policy in 2018 and early 2019. The Central Bank of Eswatini kept the repo rate unchanged at 6.75%, for the sixth consecutive time in January 2019.
Economic growth is projected to recover slightly in 2019, supported by recovery in industrial production and a modest regional economic outlook particularly the South African economy. Growth of the South African economy is expected to boost exports and regaining of the Africa Growth and Opportunity Act market is boosting textiles exports. However, fiscal challenges, especially high domestic arrears, are expected to weigh down recovery in construction and public administration sectors. Further, implementation of fiscal consolidation measures particularly suspension of almost all government capital projects continues to affect the construction sector while the wage freeze continues to constrain demand.
Poverty has persisted despite the country’s lower-middle-income status. Nationally, 58.9% of Swazis lived below the national poverty line in 2017. This follows a decline from 63% in 2009, and 69.0% in 2001. International poverty rates: 39.7% of Swazis lived below the 2011 PPP $1.90 per person per day, and this rises to 62.1% when the 2011 PPP $3.20 per person per day poverty line for lower middle-income countries is used.
Challenges to poverty reduction include slowing economic growth; adverse weather patterns, high prevalence of HIV/AIDS, high inequality, and high unemployment. Inequality is high: the per adult equivalent consumption Gini index stagnated at around 49.0 between 2010 and 2017.
The government published its Programme of Action (2013–2018), which aims to fast track progress towards Vision 2022. As a monitoring tool, the Eswatini Development Index (SDI) was defined with eight focus areas: economic prosperity, agriculture and environmental sustainability, education, health, government service delivery, infrastructure, governance and corruption.
National elections were held in September 2018, SADC and AU Observer missions declared elections peaceful. A new Cabinet was announced in November and Vision 2022 continues to frame government business.
Last Updated: Mar 28, 2019