Eswatini’s economy has begun recovering from the shock caused by the COVID-19 pandemic. Real GDP growth is projected to increase from an annual average of 1.3% for 2019 to 2021, to 2.1% in 2022. Inflation is projected to increase from an annual average of 3.4% for 2019 to 2021, to 4.8% in 2022. The elevated inflation is caused by the sanctions against Russia which have increased the price of crucial imports. In the medium-term period from 2023 to 2025, real GDP growth is projected to remain stable at an annual average of 2.1%. Meanwhile, inflation is projected to decrease to an average of 4.3% over the medium-term from 2023 to 2025.
The Government of Eswatini’s debt has been steadily increasing since 2020. Eswatini’s gross public debt is projected to increase from an annual average of 41.5% of GDP for 2019 to 2021, to 45.6% of GDP in 2022. The increase in public debt is largely due to the Government of Eswatini implementing fiscal expansion to support the economic recovery from the shock caused by the global lockdown response to the COVID-19 pandemic. The fiscal deficit is projected to narrow from an annual average of -6.0% of GDP for 2019 to 2021, to -5.8% in 2022. This shows the steady reduction in government spending and further borrowing as the economy continues recovering. In the medium-term period from 2023 to 2025, the fiscal deficit is projected to narrow to an annual average of -1.9% of GDP. Therefore, public debt is projected to decrease to an average of 42.2% of GDP over the medium-term from 2023 to 2025.
Eswatini’s external sector was not negatively affected by the COVID-19 pandemic in 2020 which reduced import demand but the sector has deteriorated due to the rebound in aggregate demand, which has increased import demand. Eswatini’s current account balance is projected to deteriorate from an annual average of USD 161.7 million (approx. 3.8% of GDP) for 2019 to 2021, to -USD 100.0 million (approx. -2.1% of GDP) in 2022. In the medium-term period from 2023 to 2025, the current account balance is projected to improve to an annual average of USD 25.3 billion (approx. 0.5% of GDP). This illustrates a short-lived improvement and the deteriorating current account balance due to the impact of the COVID-19 pandemic on aggregate and import demand. Unfortunately, Eswatini authorities have limited policy tools to respond to the current deterioration in the external sector as a member of the Common Monetary Area which maintains a fixed exchange rate to the ZAR.
Eswatini is scheduled to hold its national elections in 2023 and the election campaigning cycle is currently underway. However, the coming elections will be marred by widespread public protests since October 2021 and allegations of excessive use of force in response to protests. During the protest. The Government deployed armed security forces at various schools and there have been reports of excessive use of force in response to student protests led by Swaziland National Union of Students demanding scholarships and jobs for all. The Public Sector Associations of Swaziland, a coalition of trade unions comprised of NAPSAWU, SNAT and SNA, led public protests in Manzini demanding a public sector wage review. These protests were a continuation of demonstrations that started in May 2021, when students demanded accountability for the death of a 25-year-old law student, allegedly at the hands of the police. Eswatini has faced rising socioeconomic challenges due to economic downturn that has been worsened by the COVID-19 pandemic with unemployment rising from 23.0% in 2016 to 33.3% in 2021. Incumbent Prime Minister Cleopas Sipho Dlamini is leading a national dialogue process to address the current challenges facing the country.
The current political climate remains tense with pressures to for electoral reform and further democratisation. The SADC Organ on Politics, Defence and Security Co-operation deployed a Special Envoy to Eswatini in October 2021. Following this mission, H. M. King Mswati III accepted the need for national dialogue which is still being planned. Prime Minister Cleopas Sipho Dlamini seeks to play a central role in the peaceful resolution of the current political challenge and regain the confidence of Eswatini citizens in the electoral system. Prime Minister Dlamini has assured Eswatini citizens that the Sibaya National Dialogue process will commence soon, condemned criminal acts such as arson, violence and terrorism; and called for peaceful dialogue. On 31 March 2022, the Government published a national skills audit to develop an inventory of the skills in Eswatini’s labour market, identify future skills needs and reduce unemployment.
