WORSENING FISCAL CHALLENGES

 MBABANE - Economic activity is projected to decelerate to 1.4 per cent in 2019 from 2.4 per cent in 2018, largely due to worsening fiscal challenges.

The Central Bank of Eswatini, led by Governor Majozi Sithole, in its annual economic review report, has disclosed that the main sectors projected to perform poorly include ‘construction’, ‘wholesale and retail’ and ‘general public administration’.

It was stated that construction activity would be mainly affected by the slow implementation rate of some major public sector infrastructure projects.
On the other hand, it was reported that the hiring-and-wage-freeze continue to weigh negatively on real disposable incomes, therefore affecting output for ‘wholesale and retail trade’, as well as activities for ‘public administration and social security’. On a positive note, the manufacturing sector was expected to rebound from poor performance in the previous year.

In particular, it was pointed out that the manufacturing of ‘beverages’, ‘textiles and wearing apparel’, and ‘wood and wood products’ are the main subsectors that are expected to perform well in 2019.

Benefit

“The manufacturing sector would generally benefit from an improvement in market conditions in key destination markets.
“These include: a recovery in the South African economy, regaining of lost markets such as Africa Growth and Opportunity Act (AGOA) provided by the USA, and beef export market in the European Free Trade Area (EFTA).

In addition, there has been exploration of new markets such as Taiwan (through the Economic Corporation Agreement with Taiwan) and other prospective markets in the African region,” reads the report in part.

Positive

Going forward, it was stated that the positive performance was expected to be sustained in the secondary sector (mainly manufacturing and energy sub-sectors) throughout the medium term, in line with investments made in those sectors.

“Government’s effort to clear arrears from previous years is expected to lift performance on heavily affected sub-sectors (such as construction) in 2020.
“In line with these considerations, GDP is projected to increase by 2.9 per cent in 2020, and then retreat to 1.3 per cent and 1.7 per cent in 2021 and 2022, respectively,” added CBE.

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