By Delisa Thwala
Domestically, economic activity as measured by the quarterly gross domestic product grew by 7.0 percent year-on-year (seasonally adjusted) in the fourth quarter of 2023 following a revised growth of 6.8 percent in the third quarter.
This was revealed by the Central Bank of Eswatini in their monthly Monetary policy statement.
On July 19, 2024, the Central Bank of Eswatini (Bank), together with the Monetary Policy Consultative Committee (MPCC) held a meeting to consider the appropriate monetary policy stance.
Taking into consideration relevant global, regional, and domestic economic factors; as well as the price and financial stability mandate, the bank decided to maintain the discount rate unchanged at 7.5 percent.
Meanwhile, the policy statement further reveals that the primary sector contracted by 5.8 percent in the fourth quarter of 2023 compared to a 1.0 percent growth in the previous quarter.
The contraction was due to a decline in forestry and animal production. The secondary sector contracted by 1.5 percent in the fourth quarter of 2023 from a growth of 1.6 percent in the third quarter, while the tertiary sector grew by 11.9 percent in the fourth quarter of 2023 following an 11.6 percent growth in the previous quarter.
“ On the global front, the IMF forecasts global growth at 3.2 percent for 2024 and 3.3 percent for 2025. The growth forecast for advanced economies is steady at 1.7 percent for 2024 and 1.8 percent for 2025 while for Emerging Market and Developing Economies, the forecast was revised up marginally to 4.3 percent for both 2024 and 2025,” reads the statement.
It further reveals that the forecast for global inflation remained unchanged at 5.9 percent for 2024 and revised downward for 2025 to 4.4 percent.
“ Risks to global inflation remain elevated and include price pressures emanating from renewed trade or geopolitical tensions.
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Monetary policy conditions at the global level remain at restrictive levels with slight divergences as some central banks have begun easing including the European Central Bank, which reduced interest rates by 25 basis points,” read the statement in part.
Worth mentioning is that the country’s annual consumer inflation increased to 4.4 percent in June 2024 from 4.1 percent the previous month.
According to CBE, increases were observed in the price indices for; ‘transport’ which increased by 0.7 percent to record 2.7 percent in June 2024, and ‘food’ which increased to 4.1 percent during the month under review, from 3.6 percent in the previous month.
Additional inflationary pressures emanated from the price indices for ‘alcoholic beverages and tobacco’ and ‘restaurants and hotels’, which rose by 2.0 and 3.9 percent, respectively.
On the contrary, decreasing rates of growth were noted in the price indices for ‘clothing and footwear’ and ‘household furniture and maintenance’, which fell by 1.3 and 0.3 percent.
The Bank revised its headline inflation forecasts to 4.4 percent (from 4.5 percent forecasted in May 2024) for 2024, and 5.02 percent (from 5.13 percent) for 2025. The forecast for 2026 was left unchanged at 4.92 percent.
“Private sector credit recovered from a 0.3 percent decrease in April 2024 to 2.6 percent month-on-month to record E19.8 billion at the end of May 2024.
Credit to the business sector amounted to E10.1 billion in May 2024, reflecting a rise of 4.5 percent month-on-month while credit to the household & Non-Profit Institutions Serving Households (NPISH) sector marginally grew by 0.2 percent to close at E8.6 billion at the end of May 2024,” read the statement.
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The banking sector’s non-performing loans (NPLs) grew by 7.5 percent month-on-month to E1.2 billion in May 2024, driven by all sectors. As of 12 July 2024, gross official reserves stood at E11.6 billion equivalent to an import cover of 3.2 months.
As of the end of June 2024, total public debt decreased by 1.2 percent to E33.4 billion, an equivalent of 36.1 percent of GDP, from E34.0 billion recorded in the previous month.
The Bank will continue to monitor international, regional, and domestic developments that influence its monetary policy and will act appropriately in line with its mandate.
