ESWATINI IN TECHNICAL RECESSION

MBABANE – It seems the country has fallen into technical recession following a second consecutive negative economic growth.

Figures from the Central Statistical Office (CSO) showed that that the real 2020 quarterly gross domestic product (GDP) measured by production approach declined by 6.5per cent in the first quarter of 2020. This follows a decline of 1.2 per cent in the fourth quarter of 2019.

Some experts say recession occurs when two consecutive quarters of negative economic growth as measured by a country’s GDP.
According to the report from the CSO, year-on-year (Y-Y) seasonally adjusted 2020 quarter one (January to March) shows a decline of -6.5 per cent as compared to 3.1 in the previous year during the same period.

The Y-Y growth measures the rate of change of corresponding quarters in subsequent years.
“The quarter to quarter (Q-Q) seasonally adjusted growth which measures the rate of change from subsequent quarters shows a decline of -5.3 per cent in 2020 Q1 compared to 0.3 per cent in 2019 Q4,” reads the report.

The primary sector which on average contributes about nine per cent of the total economy (GDP) showed a decline of -0.5 per cent in 2020 first quarter year-on-year, compared to 8.7 observed in the previous year in the same period.

The realised decline was said to be due to a decrease in animal production and forestry. The secondary sector which contributes about 35 per cent to the economy also recorded a decline of -19.3 per cent during the period under review. This is as opposed to a growth of 6.4 per cent in quarter one of the previous year.

This sector is mainly determined by manufacturing and construction which has declined by -18 and -29, per cent, respectively.  Growth was only realised in the tertiary sector, which contributes about 51 per cent of the entire economic activities. This sector showed a growth of 0.1 per cent in 2020 quarter one compared to 2.1 in the corresponding quarter of the previous year.

The main contributor to this sector growth is the financial sector which grew by 14 per cent. “The fourth quarter revisions of 2019 observed were all positive throughout the sectors. The main contributor to the overall revisions was the tertiary sector with upward revision of 1.29 per cent. “The above revisions were due to updates in the data sources used in the compilation of 2020 quarter one estimates,” reads the report.

Impact

Economist Thembinkosi Dube felt growth globally was slow due to the impact of COVID-19, saying he would not be surprised if the country slipped into recession. Another local economist said he expected things to be a lot worse following the reduced economist activity.

“The biggest question is how long will it takes us to bounce back,” said the expert. Notably, it was during the first quarter of 2020 that COVID-19 started to rear its ugly head in the country. From March 27, the country enforced a lockdown to curtail the spread of the virus. Most industries had to close, including the textile and construction sectors.

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