Africa-Press – Eswatini. The past three years have been tumultuous for the global economy; we had COVID-19, escalating geo-political tensions (Russia-Ukraine) and 2023 was marked with surmountable cost of living pressures and accelerated instability in the Middle East, an oil production hub.
The global economy was feared to go into a technical recession and somehow we dodged the bullet; somehow the global economy rallied and remained resilient. The domestic economy was also not sparred from economic doldrums and I must say that the economy remained resilient, positing positive growth throughout 2023. This is largely due to the macroeconomic policies that have been implemented to get the economy on a positive growth trajectory. In the last quarter of 2023, the economy grew seven per cent, compared to quarter three of 2022.
Quarter on quarter comparison shows that the economy grew three per cent compared to quarter two of 2023. These are positive signs that we must commend. The direction taken by the relevant ministers in steering the economy in the right direction have worked. We need concerted efforts to ensure that the economy is now calibrated to produce broad-based growth (inclusive growth), ensuring that we live no one behind.
2024 at a glance
It is imperative to always be alive to global economic trends, as they invariably shape the course of the local economy. The global economy is expected to grow at 2.8 per cent and South Africa is expected to grow at 1.8 per cent over the course of 2024, while the Sub-Sahara region is expected to grow at 4.2 per cent in 2024. In the year ahead the World Bank projects that the economy of Eswatini will grow by 2.9 per cent, stagnating from 3.0 per cent growth in 2023. The growth rates are still below the five per cent mark, which is requisite for developing countries. There is more that we need to do as a country to reach the five per cent mark and to get the economy to create the required jobs. There is need to accelerate efforts to ensure that the economy grows so it can create the jobs that we desperately need as a country. Proper economic planning for the year ahead requires astute understanding of the risks that are likely in 2024.
Economic risks
The cost of living pressures witnessed in 2023 are likely to carry on to the first quarter of 2024. Global inflation is showing signs of a slowdown and, however, it still remains above two per cent in the United States (US) and the European Union (EU). This might delay interest rate cuts to the second quarter of 2024. It is expected that once the Federal Reserve Bank cuts interest rates in the US, central banks across the globe will be expected to follow suite. The looming risks of inflation and delayed cuts in interest rates will hamper global economic activity at least in the first quarter of 2024; we expect interest rates to remain constant, however at high levels and this will have adverse effects on the housing market.
Geo-political tensions in Russia-Ukraine and the Middle East continue to constrain global economic activity, affecting oil output and oil prices; and given the war tactics in the Middle East it might also affect shipping, which is just trying to rebound from COVID-19 lockdowns. All these factors combined, indicate that it would be risky to let the guard down on inflation. There is a need to constantly monitor inflation and cost of living pressures. The Chinese housing market bubble is still yet another risk factor that we must continue to monitor in 2024, given the sheer size of China in the global economy and the risks of contagion on the global economy should the bubble burst. Furthermore, we note supply side constraints in the Republic of South Africa, load-shedding is still a reality and will continue to hamper commerce domestically and in South Africa. The shipping problems in Transnet, if not resolved, will add yet another supply side constraint that the domestic economy will have to address.
Tectonic events
This year is known as election year across the globe; over half of the world’s population will be going to the ballot sometime this year. Of importance to the local economy, is the US elections, Taiwan elections and South Africa elections. The outcomes of the US and Taiwan elections will have marked impacts on the global geo-political risks and will also dictate foreign economic policy for the US. In Taiwan, if the right learning side with a softer stance on reunification wins, it might hamper the flow of development assistance into the country. The importance of budget support through development assistance from Taiwan is important for the country. The South Africa elections will determine the longevity of the country’s electricity import contract which matures in 2025; load-shedding is topical and voters are likely to vote for a party with tangible solutions for load-shedding.
Planning
The sticking point for the local economy is that we need to ramp up job creation, strengthen private sector-led growth and diversify the economy so the contribution of the private sector surpasses the contribution of government in commerce. This we need to execute within this year while SACU receipts still look good.
Source: times
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