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FESBC SEES OVER E5BN GDP LOSS

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MBABANE - Eswatini’s total GDP loss is estimated to be between E5.1 billion and E7.5 billion in nominal value in 2020.

This is per estimates by the Federation of the Eswatini Business Community (FESBC). FESBC used a theoretical framework  to define GDP, combining   household consumption of domestically produced goods and services,investment purchases by firms of domestically produced goods and services,  government  purchases of domestically produced goods and services, exports minus imports, where the difference is the trade balance or the net export.

“The outbreak of COVID-19 by implication has impacts on consumption because of lost lives, employment and income. It has impact on investment because of market uncertainties globally. It impacts government spending as governments need to spend more on their economy in attempts to contain the spread of the virus, and finally it impacts both exports and import,” noted FESBC.

The analysis paper released by FESBC Vice President Hezekiel Mabuza is based on the identity to holistically understand the impact and the magnitude on each of the components in the identity. “To estimate the impact of the virus on the various sectors in the Eswatini economy, this paper follows an estimation approach similar to that of McKibbin and Fernando (2020). Emanating from the high level of uncertainty in the evolution of the virus globally and Eswatini included, assumptions have been developed to derive the size and sign of shocks on the variables.

“The values on the assumptions are based on known impacts since the outbreak and the probable impact in the future should the virus persist. They are also based on already quantified impacts on some sectors in the global economy and domesticated to Eswatin,” reported FESBC.

Agricultural

After applying the assumptions, Eswatini’s total GDP loss was estimated to be between E5.1 billion and E7.5 billion in nominal value in 2020. With this loss, the nominal GDP in 2020 was implied to be hovering around the same level it was in 2018 and 2019. FESBC further presented the value of shocks on sectoral economic activities, revealing that the agricultural sector would also not be spared.

 

 

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