ESWATINI’S FIXED INVESTMENTS SET TO GROW BY 3%

MBABANE – Economic projections for Eswatini in 2025 present a mixed outlook, with growth supported by infrastructure investments and stable inflation, but challenged by subdued exports and regional risks. Insights from BMI, a FitchSolutions company and other experts, highlight both opportunities and risks for the year ahead. Fixed investment is set to grow by 3 per cent in 2025, fuelled by major infrastructure projects such as the E2.6 billion Mpakeni Dam and the over E300 million (US$17.8 million) Lomahasha and Namaacha Cross-Border Water Supply Project.

Other projects include the road construction (mainly the construction of MR14 and MR21 roads), and other mega projects (such as the construction of the Parliament building, strategic oil reserve and the continuous implementation of ongoing projects such as the ICC/FISH among others). Fixed investment growth is the increase in the amount of money spent on acquiring or producing durable goods. These developments are expected to contribute 0.4 percentage points (pp) to headline gross domestic product (GDP) growth, bolstering domestic economic activity. Net exports, however, are projected to weigh on overall growth. South Africa, Eswatini’s primary export market, is expected to face headwinds from high unemployment and rising household utility costs, which will limit demand for Eswatini’s key exports such as sugar, essential oils and chemical products. Export growth is forecasted to remain stagnant at 5.6 per cent, unchanged from 2024, while higher import levels driven by strong domestic demand will result in net exports subtracting 0.3pp from GDP growth. On the overall growth and inflation stability, BMI forecasts Eswatini’s GDP growth to slow to 3.4 per cent in 2025, slightly below the 3.7 per cent estimated for 2024.

Forecast

Inflation is expected to remain stable at an average of 4.1 per cent, supported by lower prices for key imports such as petroleum, with Brent crude oil prices forecast to average US$78 per barrel. The Central Bank of Eswatini (CBE) is anticipated to cut its policy rate by 50 basis points by the end of 2025, further encouraging business and consumer spending.
According to the recent economic development report from the CBE for October – November, the medium-term, real GDP is projected to grow by 8.3 per cent in 2025, while the outer years 2026 and 2027, are projected to average 4.0 per cent. The projected growth in 2025 will be largely on account of expansions in the energy-related projects, as well as prospective upscaling of implementation of public sector investment projects.

Implementation

For the outer years, the envisaged deceleration in economic growth is on account of high base effects from 2025, coupled with the completion of some mega projects with prospectively slower replacement ratio. The implementation of public and private projects (i.e. energy projects, roads, dams and other infrastructural developments) will continue in the medium-term, conditional on availability of financing. Risks to Eswatini’s economic outlook are tilted to the downside. Dr George Choongwa of the Southern African Research Foundation for Economic Development (SARFED) warns that rising food and energy prices due to unfavourable weather conditions or geopolitical tensions could weaken consumer activity.

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