ESWATINI TO LEAD SOUTHERN AFRICA’S ECONOMIC GROWTH IN 2025

MBABANE - Eswatini is set to be one of southern Africa’s fastest-growing economies in 2025, with a projected real GDP growth rate of 5.7 per cent. This is according to the latest Macroeconomic Performance and Outlook report by the African Development Bank (AfDB). This positions the kingdom among the leaders in regional economic recovery, alongside Zambia and Zimbabwe, as Southern Africa’s overall growth rate is expected to improve from 1.8 per cent in 2024 to 3 per cent in 2025. However, this 5.7 per cent forecast by the AfDB is slightly below the government’s domestic projection of 8.3 per cent, as announced by Minister for Finance Neal Rijkenberg in his budget speech delivered last Friday.

The minister expressed confidence that strong fiscal policies, investment initiatives and economic reforms would help the country surpass international forecasts and achieve higher-than-expected growth. Eswatini’s anticipated economic expansion is a testament to its resilience amid ongoing regional and global challenges. The country has consistently outperformed many of its neighbours, leveraging its strategic trade position, private sector investment and economic diversification efforts. The projected 5.7 per cent growth is expected to be driven by key industries such as manufacturing, agribusiness and financial services, supported by improved government policies aimed at stabilising inflation and encouraging business growth.

Despite global economic uncertainties, Eswatini’s strong trade position, particularly within the Southern African Development Community (SADC), continues to provide a solid foundation for economic expansion. While the AfDB’s 5.7 per cent growth projection is lower than the government’s ambitious 8.3 per cent target, it still signals a significant economic recovery for Eswatini.

Key indicators supporting this outlook include:

• Inflation rate: Projected to moderate to 4.7 per cent in 2025, providing a stable pricing environment for consumers and businesses.

• Current account balance: Expected to remain positive at 1 per cent of GDP, reflecting a strong external trade position.

• Fiscal deficit: Estimated at -2.1 per cent of GDP, highlighting the need for continued financial discipline.

Eswatini’s strong economic performance is set against the backdrop of a regional recovery, with southern Africa’s GDP growth forecast to rise from 1.8 per cent in 2024 to 3.0 per cent in 2025. The country, along with Zambia and Zimbabwe, is expected to lead this resurgence. Zambia’s economy is benefitting from agricultural and mining sector growth, while Zimbabwe is seeing improvements in electricity generation and commodity price stability. Botswana, which faced a contraction due to a downturn in the diamond market, is expected to recover with a projected 4 per cent growth rate. South Africa, however, continues to struggle with structural challenges, including energy shortages and policy uncertainties, which could constrain its growth prospects.

Key drivers of Eswatini’s economic growth

Strong private sector investment

• Eswatini’s economic growth is being fuelled by robust private sector investment, particularly in manufacturing and agribusiness. The government has prioritised regulatory reforms and incentives to attract foreign direct investment (FDI), contributing to job creation and industrial expansion.

Resilience in agriculture

• Agriculture remains a key pillar of Eswatini’s economy, with sugar exports playing a vital role in generating foreign exchange. Ongoing investments in irrigation and mechanisation are expected to boost production, ensuring sustained growth in the sector.

Trade and regional integration

• Eswatini’s active participation in regional trade agreements, including the African Continental Free Trade Area (AfCFTA), is opening new export opportunities. Infrastructure investments aimed at improving transport and logistics will further enhance the country’s trade competitiveness.

While Eswatini’s economic outlook is positive, challenges rremain. Therefore , government must continue efforts to enhance revenue collection and manage public spending effectively.
Global economic volatility, including commodity price fluctuations and geopolitical risks, could impact trade and investment.Youth Unemployment: More investment in skills development and job creation initiatives is needed to address high youth unemployment levels. Despite the difference between the AfDB’s 5.7 per cent projection and the government’s 8.3 per cent target, Eswatini is on a strong growth path. With sound economic policies and strategic investments, the kingdom is well-positioned to remain a leader in Southern Africa’s economic recovery.

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