ESWATINI ECONOMY CONTINUES TO EXPAND

MBABANE - The latest quarterly bulletin for the 3rd quarter suggests that the Eswatini economy continues to expand on a quarter-on-quarter and annual basis.

According to the quarterly bulletin provided by the Ministry of Economic Planning and Development, in the review period, 10 of the 16 indicators recorded a positive performance bolstered by improved demand for production inputs coupled with easing lending conditions to support economic activity.  

In view of the positive developments above, the Eswatini Composite Indicator of Economic Activity (ES-CIEA) signalled that economic activity continued on an expansionary path, increasing by 1.9 per cent in 2023 Q3 on a quarter to quarter basis. In the quarter under review, the decrease in prices for food and non-alcoholic beverages was primarily attributed to developments in meat, which slowed by 0.5 percentage points. Within this category prices for beef and veal as well as poultry, it decelerated by 1.3 percentage points and 0.6 percentage points, respectively.

Similarly, prices of milk, cheese and eggs declined by 1.0 percentage point due to baseline effects as the products were added to the value added tax (VAT) basket in the same period of the previous year. Sugar prices experienced significant disinflation of 8.5 percentage points, reflecting easing inflationary pressures due to improved supply in the domestic market. Transport prices also eased during 2024 Q3, with the prices for eight fuels and lubricants for personal transport equipment receding by 2.7 percentage points to average 1.3 per cent.

This decline was driven by a drop in global brent crude oil prices due to reduced demand coupled with reduced supply disruptions, which resulted in the fuel price reduction of E1.00 in the country. In 2024 Q3, prices for goods further moderated by 0.3 percentage points on account of a decrease in prices for non-durable and semi-durable goods, which were lower by 0.4 percentage points and 0.2 percentage points, respectively.

On the contrary, there were marginal increases in the prices of durable goods. Inflation for services also reflected a decline of 0.03 percentage points, owing to miscellaneous goods and services. However, there were observed increases in prices for outpatient services and accommodation services category in the quarter.Inflationary pressures remained low in the Common Monetary Area (CMA), with all the average headline inflation rates falling within the 3-6 per cent target band. In the quarter under review, Lesotho had the highest, at 6.0 per cent, followed by South Africa and Namibia at 4.2 and 4.1 per cent respectively.

Inflation

This was mainly due to a fall in the inflation rates for housing and utilities as well as transport, which could be reflective of moderating global fuel prices in the period under review. The September inflation forecast by the Central Bank of Eswatini reflected that headline inflation is anticipated to average 4.2 per cent in 2024. This was a 0.2 percentage point downward revision from the earlier projection of 4.4 per cent produced in July 2024.  

The downward revision was mainly on account of sustained reduction in the prices of food coupled with a moderation in global Brent crude oil prices, which weigh heavily on domestic inflation. Further downside pressures to the short-term inflation outlook are expected to come mainly from the lower South African.

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