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COVID-19 RESTRICTIONS RELAXATION BOOSTS ECONOMY

By KWANELE DHLADHLA | 2021-01-14

There is light at the end at the tunnel! The above adage which speaks to a long-awaited indication that a period of hardship or adversity could near the end best describes the current economic situation of Eswatini which showed signs of improvement soon after the initial relaxation of restrictions (in 2019) which had been imposed following the advent of COVID-19.

Figures sourced from the Central Statistics Office (CSO) indicate that the economy slightly recovered in the third quarter of 2020.

In Recent Economic Developments (RED) issued by the Central Bank of Eswatini yesterday, it was reported that economic activity, as measured by the Quarterly Gross Domestic Product (QGDP), increased by 1.3 per cent on a year-on-year basis (seasonally adjusted), in the third quarter of 2020, following a revised decline of 9.1 per cent in the second quarter of 2020.

“On a quarter-on-quarter basis, economic activity significantly grew by 10.1 per cent (seasonally adjusted) in the third quarter of 2020 from a 7.5 per cent decline in the second quarter of 2020.

The observed growth in economic activity largely benefitted from improvements in all the three sectors of the economy, particularly the secondary sector,” said CBE which is led by Governor Majozi Sithole.

It was stated that the secondary sector expanded by 1.6 per cent, year-on-year, in the third quarter of 2020, from a decline of 25.6 per cent observed in the second quarter of 2020. Significant improvements were noted in the ‘manufacturing’, ‘water and sewerage’ and ‘construction’ sub-sectors.

As economies eased lockdown restrictions which had been prompted by the COVID-19 pandemic, somewhat eliminating global supply chain disruptions and increasing both local and international demand, activity in the manufacturing sector rebounded.

output

Evidently, manufacturing output grew by 1.2 per cent (on a year-on-year basis) in the third quarter of 2020 compared to a 27.9 per cent decline in the previous quarter.

It was pointed out that the recovery within the manufacturing sector was mostly observed in the following subsectors; ‘manufacture of sugar’, ‘manufacture of beverages’, ‘manufacture of textiles and wearing apparel’ and ‘manufacture of wood and wood products’.

Similarly, CBE said the ‘construction’ sector increased by 9.1 per cent in the third quarter of 2020 following two consecutive contractions in the previous two quarters.

Regardless of the persistent fiscal cash-flow challenges that continue to affect the implementation of public infrastructural projects in the economy, activity in the currently ongoing capital projects improved during the quarter under review.

CBE added that economic activity in the tertiary sector rose by 1.7 per cent, year-on-year, in the third quarter of 2020 from a 1.2 per cent decline in the previous quarter. Sectors that recorded growth include, ‘information and communication’, ‘financial and insurance’ and ‘human health’.

On the other hand, CBE mentioned that slower economic activity came from the ‘wholesale and retail’, ‘transportation and storage’, ‘hotels and restaurants’ and ‘public administration’.

Notably, some of these sectors were constrained by the second-round effects of the COVID-19 induced partial lockdown. “Positive performance also emanated from the primary sector, which grew by 5.0 per cent in third quarter of 2020 from a 3.6 per cent growth in the second quarter of 2020.

The growth was mainly driven by improved performance of the ‘growing of crops’ and ‘mining’ sub-sectors,” noted CBE.

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