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SD’s economic growth at 2.4%

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MBABANE – Contrary to the projection of 3.5 per cent in the growth of the economy for 2008, official estimates now put real gross domestic product (GDP) growth at 2.4 per cent.

This is according to the Central Bank of Swaziland’s (CBS) Annual Report for 2009. “After recording an impressive growth rate of 3.5 per cent in 2007, official estimates put real GDP growth at 2.4 per cent in 2008, which is a downward revision from an initially projected growth rate of 3.5 per cent for 2008,” it says.

The CBS attributes the dampened growth to the negative performance of some export commodities especially in the textile industry and to the persistent slow growth in foreign direct investment (FDI). “The slowdown in the textile industry is attributed to the decline in the economies of trading partners partly because of the second round effects of the global financial crisis on developing countries.

The shrinkage in the trading partners’ economies has been translated to lower demand for domestic exports, hence a decline in the volumes of exports. Consequently, given the country’s heavy reliance on export for growth, the country experienced a decline in overall real GDP growth,” it says.

Another dampening factor was the sharp downturn in the South African economy in 2008, which undermined Swaziland’s export demand given that more than 50 per cent of the country’s exports are destined to SA markets. The report continues; “The domestic economy has also suffered from high cost of borrowing as a restrictive monetary policy stance is pursued to contain inflationary pressures.

This has also culminated in the slowdown in the construction sector as high interest dampened demand for housing and credit in general for construction purposes.” Further compounding the slowdown in the construction sector were the high prices of raw material resulting from the hike in oil prices that occurred for the better part of the period under review, the report says.

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