IMF REVISES ESWATINI GROWTH FORECAST UPWARDS

MBABANE – The country has escaped a downgrade of its 2022 GDP growth forecast by the International Monetary Fund (IMF).

In the latest figures released this past Tuesday, the country’s gross domestic product (GDP) growth forecast was revised upwards from 1.7 to 2.1 per cent by the renowned global lender.
The latest developments come amid fears of a slow growth following projections that were made by renowned ratings agency Fitch Solutions in December last year.  The latter said in 2022, Eswatini growth would slow due to fading base effects; the continued impact of the COVID-19 pandemic; and weaker economic growth in South Africa, Eswatini’s main trading partner. In his reaction to the latest developments, Minister of Finance Neal Rijkenberg said what prompted the growth was that in the past year, the economy grew to 5.9 per cent from a predicted 1.4. “That puts us on a higher growth projection,” the minister said briefly.

Meanwhile, in his budget speech in February this year; the minister said the medium-term outlook remained uncertain for the domestic economy.  He highlighted that the three-year Fiscal Adjustment Plan for the period 2021/22 to 2023/24 financial years was expected to dampen growth in sectors linked to government operations such as public administration, construction, wholesale and retail, financial services and professional services. “Even though the predictions for outer years remain uncertain, there are a number of reforms including the issuance of mining licenses; the implementation of the post-COVID recovery plan; and a number of projects with significant growth implications that will likely pull our growth numbers up in the medium term,” he had earlier said.

For regional powerhouse and neighbouring South Africa, Business Day reported that higher commodity prices helped the country to avoid a downgrade of its GDP growth forecasts by the IMF for the next two years. However, it is still entrenched among underperformers. South Africa’s economy, according to the latest forecast, is expected to grow at least 1.9 per cent.
When it comes to global projections, the IMF figures do not make for riveting reading. The IMF slashed its world growth forecast by the most since the early months of the COVID-19 pandemic, and projected even faster inflation, after Russia invaded Ukraine and China renewed virus lockdowns. “Global expansion will slow to 3.6 per cent in 2022, down from a forecast of 4.4 per cent in January before the war,” the IMF said. That compares with 6.1 per cent growth in 2021. The institution also lowered its projection for 2023 to 3.6 from a prior 3.8 per cent.

The fund sees inflation for this year at 5.7 per cent in advanced economies and 8.7 per cent in emerging and developing countries, significantly higher than a few months ago. The pace of consumer-price increases is expected to slow to 2.5 and 6.5 per cent, respectively, in each group of nations in 2023. The IMF cited a rising risk that inflation expectations become unanchored, prompting more aggressive central bank tightening. “The Washington-based fund expects Ukraine’s economy to contract 35 per cent in 2022 as a direct result of the invasion. Russia’s output may shrink 8.5 per cent due to sanctions imposed by western nations and a loss of confidence in the country. But the impact of President Vladimir Putin’s aggression will spread far beyond the two countries. The invasion is sending commodity prices soaring, raising the cost of food and fuel, and stoking unrest and protests around the world, from Sri Lanka to Peru,” shared IMF.

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