EZULWINI – The Central Bank of Eswatini (CBE) Governor Dr Phil Mnisi delivered his Annual Monetary Policy Statement under the theme, ‘In Pursuit of Prudent Monetary Policy In Times of Uncertainty Due to Global Trade Disruptions.’
Mnisi said there were a number of uncertainties in the international space that include the recently introduced United States of America tariffs on trade.
Dr Mnisi said in 2024 and the first quarter of 2025 have witnessed the global economy battling with multiple challenges which have affected economic growth. Dr Mnisi said risks persist despite stabilising inflation and interest rates. He said despite these, the stability remains at restrictive levels.
The key global and regional influences include the International Monetary Fund’s (IMF) projected international growth falling from 3.3 percent in 2024 to 2.8 percent in 2025, to marginally recover to 3 percent in 2026 due to a number of perceptions.
Emerging economies at 4.4 percent are falling from in 2024 to 3.7 percent in 2025 before recovering in 2026 to 3.9 percent in 2026, against advanced economies with lower growth rates, Dr Mnisi said.
“The IMF has indicated that the growth impact of tariffs imposed by the United States, in the short term, varies across countries, depending on trade relationships, industry compositions, policy responses and opportunities for trade diversification,” Mnisi said, adding that the IMF further projects international economy to decline from 5.7 percent in 2024 to 4.3 percent in 2025 and 3.6 percent in 2026.
Advanced economies have eased monetary policy as inflation was brought down while emerging economies face pressures that continue to not alleviate high rates and are more cautious in their approaches.
In South Africa, the major trading partner saw a Gross Domestic Product (GDP) growth of 2.2 percent and had the slowest growth rate. GDP growth is expected at 1.7 percent in 2025, from 0.6 percent in 2024 to 1.8 percent in 2026. Inflation in South Africa increased to 2.8 percent in April from 2.7 percent in March.
In Eswatini, CBE reduced the discount rate by a cumulative 50 basis points in 2024/2025. CBE reduced the discount rate by 25 basis points to 7.2 percent in September and another November 2024, to ease global monetary policy conditions.
The lower dometic inflation outcomes and improved inflation outlook for the domestic economy. CBE maintained the discount rate at 7 percent in January and March 2025. Preliminary estimates show GDP growth slowed to 2.2 percent in 2024 from 3.3 percent in 2023. The primary GDP growth is currently at 5.3 percent. In 2026 it is projected to be at double digit at 10.9 percent before slowing to 5.6 percent in 2027.
Real GDP is at 7.9 percent, currently, to 5 percent in 2026 and 3.3 percent in 2027. The year 2025 is expected to accelerate the GDP with the announcement of the commencement of both public and private sector projects, Dr Mnisi said. These projects are in dam construction and major energy related projects.
The economy treads on fractured trade-related issues and global uncertainties. Dr Mnisi said unforeseen delays in the announced commencement of the projects could also undermine economic growth. Credit to the private sector rose in 2024 at 8.4 percent largely underpinned by a positive outlook. Household credit also increased. Credit growth may be constrained by the uncertainties in global economic prospects, particularly following the introduction of new tariffs by the U.S.
In 2024, gross official reserves amounted to E10.1 billion, higher from E8.5 billion in December 2023. Dr Mnisi said the reserves cover 2.4 months of imports down from 2.6 months recorded in December 2023. Imports have rapidly risen in the period under review, he said, where in the four months of 2025, reserves have risen due to the SACU receipts. By May 16, the reserves were recorded at E10.3 billion and were sufficient to cover 2.3 months of imports. He said in the short term period, the reserves are anticipated to decline largely due to a 20.4 percent reduction in SACU receipts projected for the financial year 2025/2026.
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