MBABANE – Jobs, wages and everyday living costs for emaSwati are at risk, as Gulf tensions could slow economic growth by up to one per cent, warns the Central Bank of Eswatini (CBE).
The CBE said escalating tensions involving Iran, Israel and the United States are already transmitting negative shocks to the local economy. CBE Governor Dr Phil Mnisi explained that Eswatini’s economy is closely tied to South Africa, meaning any adverse impact of the Iran – Israel – US conflict on that economy will be felt locally.
While no final position has been taken, the bank is modelling a possible reduction in GDP growth of between 0.3 per cent and one per cent if the situation worsens.
In practical terms, such a decline is significant for a small economy like Eswatini. Growth projected at around 4.6 per cent by the International Monetary Fund (IMF) could fall closer to 3.6 per cent. GDP growth is already expected to moderate to 4.6 per cent in 2026 and 3.2 per cent in 2027. The consequences would include less money circulating in the economy, fewer jobs and slower business activity. For ordinary citizens, this could mean fewer employment opportunities, stagnant wages and reduced government capacity to deliver services.
Dr Mnisi said the economic shock is transmitted through three key channels: Supply chains, inflation and financial markets. “So the scenario that we are looking at, although we have not fully done a simulation that shows a projection, but just looking at the factors on the ground and the data that is emerging, the tension in the Middle East, Iran, US and Israel war is certainly transmitting various factors that are negative to the GDP. The first channel is general supply chains, so the availability of fuel and other commodities that are input into our production,” he said.
He said supply constraints, particularly around fuel, are already evident.
“And the second one is general prices, which fuel inflation. So, with the price of fuel, of oil, which we have seen escalating, that is one factor that is going to be a negative contribution to our GDP.”
The third channel is financial markets.
“At this point in time, you must have seen that major economies have been holding rates because of the uncertainty, even though inflation is currently down. But a hyped cost of fuel, hyped cost of supply of goods and services triggers a monetary recession. So these are broader factors that we have looked at and we are looking at.”
He said the combined effect would weigh on job creation and economic value. “That would be a position that I could share with you at this point in time. And of course, this has got a negative consequence in terms of job creation, value creation for the economy,” he said.
Dr Mnisi added that while some projections suggest the crisis could be short-lived, lasting no more than three months, a prolonged conflict would pose a serious threat to regional and global growth.
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… global oil market impact
MBABANE – As the Iran – Israel – US conflict enters its third week, economic implications for Eswatini are growing.
University of Eswatini Lecturer Sanele Sibiya explained that despite the kingdom’s distance from the conflict, it is highly exposed to global oil price shocks. “Over 20 per cent of global oil production originates from the Persian Gulf. Disruptions there ripple across international markets. Even though Africa can source oil elsewhere, prices are determined by Brent crude and OPEC coordination. A projected three per cent increase in pump prices for Eswatini is plausible,” he said.
Sibiya highlighted several drivers of the expected surge, including attacks on energy infrastructure in Saudi Arabia, Kuwait, the UAE and other countries, which could take months to restore.
He emphasised the strategic role of the Strait of Hormuz: “As long as Iran controls passage through the Strait, oil prices will remain high. There is no clear US plan to ensure commercial shipping and Europe has refused military intervention. Markets react to every signal from Washington, Tel Aviv and Tehran.”
*Full article available on Pressreader*
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