Republic of eSwatini

The services and the industry sectors play a significant role in the growth and development of the eSwatini economy, contributing 48.61% and 45% of GDP respectively, followed by agriculture which contributes 6.4% of GDP. eSwatini is also dependent on trade for its economic growth with trade in goods and services contributing about 102% of GDP in 2016. In 2017 real GDP growth declined to approximately 1%, down from 1.3 % in 2016 owing to agriculture contracting due to the 2015 El Nino drought and reduced government spending, which also hindered the implementation of public projects.

Driven mainly by investment in textiles triggered by the diversification to a new market, particularly South Africa, the manufacturing sector performed relatively better. Manufacturing is also expected to be boosted by increased food processing. The expansion of the construction industry is also likely to contribute to growth. Growth is expected to improve to approximately 2.5% in 2018.

eSwatini maintains an expansionary fiscal policy to boost economic activity. In 2015-2015, the country experienced a deficit in its budget balance, which increased sharply in 2016 owing to a decline in Southern Africa Customs Union (SACU) revenues and an upward adjustment of public-sector wages. Much of the budget deficit is financed through domestic borrowing which has a crowding-out effect on private sector borrowing thereby threatening the stability of the banking sector.

The country’s current account deterioration led to the country’s international reserve cover declining to 3.4 months of imports at the end of 2016. In 2017, eSwatini registered inflation of 7% compared to 8% in 2016 due to declining food prices.

Potential Opportunities

With a population of 1.15 million in 2017 that is expected to grow to 1.18 million in 2019, a GDP of US$4.03 billion in 2017, which is expected to increase to about US$4.05 billion in 2019 and a GDP per capita income of US$3,513 in 2017, projected to decrease to US$3,443 in 2019, eSwatini provides a relatively small market for exporters and investors. However, the country holds opportunities for export diversification to neighbouring South Africa, SADC, SACU, COMESA, Africa, the UK and the US market under Africa Growth Opportunity Act (AGOA).

The country’s volume of imports of goods and services is expected to increase from -3.88% in 2017 up to -1.68% in 2019 and the amount of exports of goods and services is expected to grow from 0.23% in 2017 up to about 2.07% in 2019, indicating a potential for trade expansion.

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