MBABANE – The Central Bank of Eswatini has reported a slight easing in inflation and stronger economic growth for the third quarter of 2025, as the country entered the new year with mixed signals across key economic indicators.
According to the bank’s December 2025 and January 2026 economic review, annual headline consumer price inflation fell to 2.3 per cent in December 2025, down from 2.4 per cent in November. The slowdown was largely driven by lower price pressures in housing and utilities, clothing and footwear, household furniture and maintenance, as well as recreation and culture.
The housing and utilities index dropped to 4.1 per cent from 4.4 per cent, reflecting slower increases in water supply charges and lower liquid fuel prices compared to the same period last year. Water supply growth moderated to 4.0 per cent from 8.2 per cent after the second tranche of the approved multi year tariff was not implemented this year. Clothing and footwear inflation also eased by 1.1 percentage points to 5.9 per cent due to softer garment and footwear prices.
However, upward pressure came from food and non alcoholic beverages, transport and miscellaneous goods and services. After seven months of decline, food prices edged up by 0.3 percentage points to 0.3 per cent, with increases recorded in meat, oils and fats, fruit, and milk, cheese and eggs. Transport inflation rose to 0.8 per cent from 0.7 per cent, largely due to a 5.9 percentage point jump in passenger air fares. Miscellaneous goods and services increased to 5.6 per cent.
On a month on month basis, inflation remained at zero for the second consecutive month. Core inflation, which excludes food, auto fuel and energy, declined to 2.8 per cent in December 2025 and recorded zero growth month on month. Goods inflation also softened from 2.5 per cent to 2.3 per cent as prices for non durables and semi durables fell.
Economic growth gathered pace in the third quarter of 2025. Real Gross Domestic Product expanded by 5.8 per cent year on year, seasonally adjusted, compared to a revised 4.3 per cent in the previous quarter. On a quarter on quarter basis, growth slowed slightly to 2.1 per cent from 2.6 per cent.
The primary sector rebounded strongly, growing by 11.8 per cent year on year and contributing 0.9 percentage points to overall growth. Mining and quarrying surged by 65.3 per cent following a 22.7 per cent contraction in the previous quarter, pointing to renewed activity in the local coal industry after earlier demand side disruptions. Agriculture and forestry grew by 1.7 per cent, recovering from a 9.4 per cent decline, with forestry rising by 13.4 per cent due to firmer external demand. Crop production and animal output remained subdued.
The secondary sector, which accounts for 37.7 per cent of total industries, rose by 9.9 per cent and contributed 3.7 percentage points to overall GDP growth. Manufacturing expanded by 10.0 per cent, supported by stabilising demand for non food export commodities. Electricity supply grew by 5.6 per cent on the back of stable local generation and distribution. Water supply contracted by 13.5 per cent due to a slight drop in treated water customers. Construction maintained double digit growth at 13.0 per cent, driven by major public infrastructure projects and active private sector developments across the Kingdom.
The tertiary sector also recorded stronger performance, growing by 6.2 per cent from 4.1 per cent in the previous quarter. Information and communication led the expansion with a 30.6 per cent increase.
Monetary indicators showed tighter liquidity conditions. Broad money supply declined by 4.9 per cent month on month to E29.2 billion in December 2025, in line with a downward trend in net foreign assets. Credit extended to the private sector rose to E22.4 billion, up 2.1 per cent month on month and 9.8 per cent year on year.
The discount rate remained at 6.75 per cent while the prime lending rate stood at 10.25 per cent in January 2026.
Gross official reserves fell by 3.8 per cent month on month and 12.9 per cent year on year to E11.2 billion at the end of January 2026, covering an estimated 2.6 months of imports.
Public debt reached E38.1 billion at the end of January 2026, equivalent to 39.7 per cent of Gross Domestic Product.
On the external front, the Lilangeni and Rand strengthened against major trading currencies in January, with the exchange rate averaging E16.28 to the United States Dollar. Despite the stronger currency, the country’s trade surplus narrowed sharply to E80.8 million in January 2026 from E459.4 million in December 2025.
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