- Prices for raw materials that make up the crop nutrient commodity market – ammonia, nitrogen, potash, urea, phosphates, sulphates and nitrates – have risen 30 per cent since the start of the year
Mbabane – It is a given that Eswatini’s economy is relying heavily on the agriculture sector but the price of the items that contribute to the growth of this sector are expected to increase.
The prices of fertiliser and wheat, items that Eswatini imports mainly from South Africa, are expected to go up in the near future and this is largely due to the geo political conflict between Russia and Ukraine that is currently on-going.
The projections were allayed by Standard Bank Group Economist Ferishka Bharuth during the Eswatini Economic Forum hosted by the financial institution at Royal Villas.
Southern African Customs Union (SACU) countries rely on South Africa for the importation of fertiliser and wheat. South Africa also relies heavily on Russia and Ukraine in importing these products.
Prices for raw materials that make up the crop nutrient commodity market – ammonia, nitrogen, potash, urea, phosphates, sulphates and nitrates – have risen 30 per cent since the start of the year, and are now higher than the levels reached during the food and energy crisis when prices jumped in 2008, according to experts.
The onset of the Ukraine conflict came at a time when global food and fertilizer prices were already hitting record highs. As a net importer and price-taker of various commodities such as wheat, vegetable oil and petroleum products, prices in the Southern Africa region have already surged. Nearly 80 per cent of countries in the Southern Africa region are 100 per cent import dependent for wheat and its products as well as fertiliser.
Making her presentation virtually, Bharuth said global production networks are now facing another shock posed by the Russia and Ukraine conflict after the shock that they have faced following the outbreak of the pandemic and supply chains have barely had the chance to recover.
She said that Eswatini will be mostly affected through the financial markets because of the Rand, commodity and food channels as well as the compounding disruptions of the supply chain.
What was highlighted by the Economist is that most African countries, including South Africa which is the leading trade partner of Eswatini, are trading with Russia and Ukraine and imports hold a larger share of the trade between the involved parties.
It is worth mentioning that Eswatini has little direct trade activity with Russia and Ukraine as and the trade links are small that they account for only for 0.005 per cent of the total trade and that is imports and exports combined.
However, this does not mean that Eswatini and other countries that fall in the same category, are not going to be affected by the on-going geo political events of Russia and Ukraine.
“Eswatini is a net oil importer and what we’ve noticed with Eswatini and other countries that fall in the same category is that we probably going to see a deterioration in the trade balance this year,” she said.
She said that oil prices, as it stands, will remain above E1 470 ($100) for the rest of the year, potentially declining to E1 170 ($80) next year but that will be highly dependent on the events of the geo political conflict of Russia and Ukraine.
…Growth projected at 2 per cent in 2022
Despite the challenges posed by the Eastern European conflict, domestic growth has been projected at 2 per cent for the current financial year.
One thing that Bharuth highlighted, which would feed massively into the domestic growth, was the agriculture sector. She said that one would note how private incomes evolve, a higher agriculture outturn typically off-sets private income or private expenditure and the country could get that spill over effect from a good agriculture outturn.
She also highlighted that their in-house climate change analysts believe that rainfall is going to be more than adequate in the region, including in the Kingdom of Eswatini and that will help feed the economic growth of the country through the agriculture sector.
However, renowned local Economist who also serves as an Economics Lecturer at the University of Eswatini, Sanele Sibiya, had a different opinion on the projections of the anticipated growth. He said that he wouldn’t put the growth near 2 per
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