BY MBONGENI NDLELA
MBABANE – Eswatini’s economy depicted a recovery in 2023 from the low growth experienced in 2022.
This is contained in a report released by the Ministry of Economic Planning and Development in collaboration with the Central Bank of Eswatini on domestic developments in the macroeconomic landscape.
Minister Dr Thambo Gina stated that real Gross Domestic Product (GDP) grew by three (3) percent quarter-on-quarter and 7.7 percent on a year-on-year basis (seasonally adjusted) in the third quarter of 2023.
He said Exports of goods, on the other hand, grew by 19.2 percent in 2023, compared to 6.3 percent in 2022, largely benefitting from a 12 percent depreciation of local currency against major trading currencies.
“On price developments, overall inflation increased to five percent in 2023 relative to 4.8 percent in the previous year. The discount and prime lending rates were unchanged at 7.5 percent and 11 percent respectively. Credit to the private sector increased by 2.9 percent in real terms in 2023 down from seven percent in 2022. Gross Official Reserves rose by 15.2 percent in 2023 compared to a decline of 15.4 percent in 2022. The recovery in reserve position was largely buoyed by a rebound in the Southern African Customs Union (SACU) receipts, which increased from E5.82 billion in the 2022/23 fiscal year to E11.75 billion in 2023/24. The country’s gross official reserves were sufficient to cover 2.8 months of import cover as of December 2023, falling below the international benchmark of 3.0 months of import cover,” stated the minister.
On medium-term GDP projections, the minister said according to the latest projections (January 2024 review), the Eswatini GDP is estimated to have expanded by 4.8 percent in 2023, reflecting a slight upward revision from the previous projection of 4.7 percent (in September 2023).
He said the increase is accounted for by a strong performance from the tertiary sector, which counteracted a slowdown in the secondary sector and a poor performance in the primary sector.
“As previously anticipated, the second half of 2023 marked the commencement of Phase I of the Mkhondvo-Ngwavuma Water Augmentation Program (MNWAP), which includes the construction of the Mpakeni dam estimated at E2.629 billion. This is expected to be one of the main drivers of growth for the short-to-medium term, coupled with other developments within other sectors of the economy. Real GDP is projected to grow by 4.9 percent in 2024 (unchanged from previous projections), whilst the outer years 2025 and 2026, are projected to average 3.4 percent, which is an upward revision from the previously projected average of 2.5 percent,” stated the minister.
He further stated that the primary sector, which comprises ‘agriculture and forestry’ and ‘mining and quarrying’ activities is estimated to have contracted by 2.3 percent (from a previous projection of -0.2 percent).
“Developments in the primary sector were mixed. The decline is largely attributed to developments in the ‘agriculture & forestry’ sub-sector. Varying degrees of unfavorable weather conditions weighed negatively on crop production. Droughty conditions during the 2022/23 planting season negatively affected rain-fed crops, particularly cotton production, which decreased by 45.1 percent. Above-normal rains in the latter part of 2023 increased cloud cover and weighed negatively on sucrose yields. In addition, sugarcane yields were further compromised by the harvesting of young cane due to a prolonged harvesting season in the previous year. As a result, crop production is estimated to have declined by 6.8 percent in 2023, which is worse than -2.9 percent projected previously. Similarly, the forestry sub-sector is estimated to have declined by 9.4 percent (relative to a previously projected growth of 14.5 percent). The notable downward revision is attributable to logistical challenges in shipments of timber products in the second half of 2023, coupled with a slowdown in external demand particularly in the South African market, due to continued load-shedding issues,” he said.
Mining and quarry sector grows from 35.5% to 46.5%
MBABANE – Dr Thambo Gina says on a positive note, the ‘mining and quarrying’ sub-sector was revised to 46.5 percent, higher than a previous projection of 35.5 percent.
This was largely attributable to an acceleration in coal production, which continued to benefit from the mining of high-yielding crown land following the awarding of two (2) mining licenses in 2022, as well as the reopening of previously discontinued shafts.
“Notably, coal production rose to a record high of 128,815 metric tonnes (MT) for 2023Q3, which is more than double the average quarterly volumes recorded in the first half of 2022.
In 2024, the primary sector is projected to strongly rebound to 6.3 percent, in consideration of low-base effects from the previous year, a recovery in the sugar industry considering additional sugarcane production from the Lower Usuthu Smallholder Irrigation Project (LUSIP) II, and sustained growth earmarked for the Mining & Quarrying subsector. However, the uncertainty over the well-publicized El Niño phenomenon discouraged some farmers from planting, particularly maize farmers. Notably, tractor planting hours depicted a decline of more than 30 percent in the 2023/24 planting season, which will result in a lower maize output in 2024. Conditional on favorable weather conditions and continuous implementation of planned projects such as LUSIP II and MNWAP, the primary sector is projected to average 2.1 percent in the medium term (i.e. 2025 & 2026),” stated Gina.
