Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Albert Mafusire, Fatou Leigh

Download the full country note in PDF

  • In spite of an expansionary fiscal stance, economic growth is expected to decelerate to just over 2% in 2014 as private sector investments remain low.
  • Uncertainty in Southern Africa Customs Union (SACU) revenue receipts beyond 2015 calls for accelerated fiscal reforms that would lock-in the benefits from the current high inflows.
  • An unfavourable business environment constrains the extent to which the economy could benefit from existing links into global value chains.

Economic growth in Swaziland is expected to weaken to just over 2% in 2014, down from the estimated 3.5% in 2013. This deceleration is largely the result of existing structural constraints, despite the large inflows from the Southern Africa Customs Union (SACU) revenue pool. The spending of SACU income means that no fiscal space has been created to enhance the government's ability to respond to potentially reduced SACU receipts in the future. The main growth drivers in 2013 were the recovery in domestic and external demand buoyed by public expenditure and stronger global demand for exports.

Price pressures have gradually been easing out, with headline inflation declining from a peak of 9.6% in May 2012 to 4.4% in December 2013. Reflecting the positive macroeconomic environment and growth of the economy, annualised private sector credit grew by 6.5% as of end-November 2013. The healthier fiscal position has also allowed gross foreign reserves to increase from an equivalent of 3.2 months of import cover at the beginning of the year to 4.8 months in November 2013.

The business environment is slowly improving but a significant number of reforms are still needed to make it conducive. Swaziland's ranking in the 2014 Doing Business Index by the World Bank was 123 out of 189 countries. Over the same period, the World Economic Forum's Global Competitiveness Report 2013-14 ranked Swaziland at 124 out of 148 countries. Swaziland's governance indicators compare unfavourably with its neighbours. In 2013 the Ibrahim Index of African Governance ranked Swaziland 26th out of 52 countries with a score of 50.8, thus registering a slight rise over the 2012 ranking of 27th. The 2013 Index ranks Swaziland poorly in participation and human rights, as well as sustainable economic opportunity attributable to weak institutional capacity and a relatively rigid political system.

Swaziland's share in global trade has fallen over the years – its share in world merchandise exports peaked at around 0.02% of world trade in 2004, but fell sharply to 0.01% in 2010. The country's contribution in global value chains, although small in absolute terms, is quite significant for the domestic economy.

Table 1: Macroeconomic indicators

Real GDP growth1.
Real GDP per capita growth0.2211.1
CPI inflation8.
Budget balance % GDP-
Current account balance % GDP3.35.6-0.9-7.8

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.