ESWATINI’S LOWEST GROWTH FORECAST IN CMA

MBABANE – In its latest World Economic Outlook, IMF has maintained a very low growth forecast for Eswatini this year.

According to its online profile, the International Monetary Fund (IMF) is an organisation of 190 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. In the past week, the IMF released its latest outlook for July 2021, maintaining the same 1.4 per cent growth forecast for Eswatini. Comparatively, these figures are lowest in the Common Monetary Area (CMA).

Purpose

The CMA links South Africa, Namibia, Lesotho and Eswatini into a monetary union.  The main purpose of this trade is that all of the parties can have the same development and equitable economic advance so they can be treated as a whole. For Namibia, the 2021 Projected Real Gross Domestic Product (GDP) is 2.6 per cent. Lesotho’s growth forecast figures are at 3.5 per cent. For South Africa, which is the Southern region’s heavyweight, the IMF upwardly revised the growth outlook for this year from 3.1 to four per cent. Despite Eswatini’s strong and positive figures in the first quarter of this year, IMF did not adjust the country’s growth forecast. In the first three months of 2021, the Real quarterly GDP indicated an increase of 9.0 per cent (seasonally adjusted year on year) following a revised increase of 3.3 per cent in the fourth quarter of 2020. The quarter-to-quarter seasonally adjusted growth rate which measures the change from subsequent quarters showed an increase of 3.8 per cent in 2021 quarter one.

Projections

The IMF projections are still below government’s forecast. According to the country’s official projections issued in January  this year, GDP was projected to increase by 2.7 per cent and an average of 2.3 per cent in 2022 and 2023. Meanwhile, the IMF also kept the outlook for sub-Saharan Africa unchanged at 3.4 per cent. Eswatini falls under this region. The IMF still sees the worsening pandemic developments in sub-Saharan Africa to weigh on the region’s recovery. IMF chief economist Gita Gopinath said the global growth recovery was continuing - but there was still a divergent gap between advanced and emerging markets and developing economies. In its report, the IMF noted that vaccine access has resulted in two blocs of global recovery. “Most advanced economies are set to experience a normalisation of economic activity and other countries will face resurgence of COVID-19 infections and death tolls. According to the report, close to 40 per cent of the population in advanced economies has been fully vaccinated,” reads the report in part. The IMF warned that steady recovery will not be assured especially if segments of the population remain susceptible to the virus and mutations. “Recovery has been set back severely in countries that experienced renewed waves,” the update read.

Vaccine

According to the IMF, a slower-than-anticipated vaccine rollout will allow the virus to mutate further; that, coupled with tightening financial conditions, will negatively impact emerging markets and developing economies. The IMF sees inflation picking up and returning back to pre-pandemic levels in most countries by next year. “Elevated inflation is also expected in some emerging markets and developing economies, related in part to high food prices,” the report read. The IMF said that central banks should ‘look through’ the transitory inflationary pressures - and avoid premature tightening. Analysts told this publication that the country’s recovery would be dealt a blow by both the third wave of coronavirus infections and the recent vandalism.

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