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ESWATINI’S SECOND HIGHEST GROWTH PROJECTION

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MBABANE – While the country’s economy is expected to contract due to the effects of COVID-19, its projected figures look better than its regional counterparts.

According to a report released on July 7 by the African Development Bank Group (AfDB), the economy is projected in the baseline scenario to contract by 2.6 per cent in 2020, compared with growth of 2.5 envisaged before the outbreak of the pandemic. Baseline scenario assumes that the virus subsides this month. In the worst case scenario (when virus continues through December), according to the AfDB report on Africa Economic outlook report, the country’s economy is projected to contract -6.3 per cent.

Containment

“The export-oriented industrial sector (36 per cent of GDP) is expected to suffer from weak external demand, while the service sector (53 per cent of GDP) is expected to be weighed down by the demand-reducing containment measures and restrictions,” highlighted AfDB. While these figures do not make for reverting reading, they are notably better (second best) than most of Eswatini’s counterparts in the five-member Southern Africa Customs Union (SACU) region.

Endure

Namibia, according, to the report, would endure a least contraction in the baseline scenario (1.5 per cent). Regional powerhouse South Africa, who is Eswatini’s major trading partner, has the worst figures in the SACU region. The latter’s economy is expected to contract -6.3 and -7.5 per cent in the baseline and worst-case scenario, respectively. Other SACU members are Lesotho and Botswana and their contractions are expected to be worse than here in Eswatini. Continentally, real GDP is projected to contract by 1.7 per cent in 2020, dropping by 5.6 per centage points from the January 2020 pre-COVID–19 projection, if the virus has a substantial impact but of short duration. If it continues beyond the first half of 2020, there would be a deeper GDP contraction in 2020 of 3.4 per cent, down by 7.3 percentage points from the growth projected before the outbreak of COVID–19.

Scenario

Meanwhile, as reported in the past week, AfDB has noted that the fiscal deficit is forecast to reach 10.2 per cent of GDP in 2020 in the baseline scenario and 10.7 per cent in the worst-case scenario. Public debt, currently slightly above 30 per cent of gross domestic product (GDP) will likely breach the 35 per cent threshold as the government borrows to mitigate the effects of the pandemic. An economist felt the worst was yet to come, highlighting that South Africa’s figures were putting the country in a precarious position.

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