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- GDP (PPP):
- $10.8 billion
- 1.7% growth
- 2.3% 5-year compound annual growth
- $8,453 per capita
- Inflation (CPI):
- FDI Inflow:
Inefficient regulatory and legal frameworks have deterred development of more dynamic private investment and production in Swaziland. Privatization has progressed only marginally. Averaging annual growth of around 2 percent over the past five years, Swaziland’s economic performance has lagged behind that of other economies in the region.
Bureaucratic inefficiency and corruption affect many aspects of the economy, discouraging more vibrant activity. The most visible constraints on the emergence of economic dynamism are related to poor management of public finance, administrative complexities, and a lack of respect for contracts. Court enforcement of property rights is vulnerable to political interference.
King Mswati III rules Africa’s last absolute monarchy. Political parties are banned, and rights groups accuse the government of imprisoning journalists and pro-democracy activists. Parliamentary candidates are handpicked by chiefs who are loyal to the king, and international observers declared the most recent elections, held in September 2013, not credible. In June 2014, responding to crackdowns on peaceful demonstrations and a lack of protection of workers’ rights, the U.S. disqualified Swaziland from receiving the market-access benefits available under the African Growth and Opportunity Act. Because about one-third of Swaziland’s garment and textile exports at the time went to the U.S., the AGOA disqualification forced Swaziland to reorient some of its exports regionally.
The right to own property is protected by law, but most Swazis reside on Swazi Nation Land that is not covered by this constitutional protection, and 60 percent of land does not have clear title. The constitution provides for an independent judiciary, but the king’s power to appoint judges limits judicial independence. Corruption is a major problem. Areas most affected include public contracting, government appointments, and school admissions.
The top individual income tax rate is 33 percent, and the top corporate tax rate is 27.5 percent. Other taxes include a fuel tax and a sales tax. The overall tax burden equals 26.0 percent of total domestic income. Government spending has amounted to 30.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.0 percent of GDP. Public debt is equivalent to 17.4 percent of GDP.
Saddled with an inefficient regulatory environment, Swaziland’s private sector faces considerable challenges. Various regulatory requirements increase the overall cost of carrying out sustainable entrepreneurial activity. A formal labor market has not been fully developed. In 2015, the IMF called for reductions in subsidies and transfers, but policymaking is ultimately in the hands of the king, and significant economic reform appears unlikely.
Trade is important to Swaziland’s economy; the value of exports and imports taken together equals 77 percent of GDP. The average applied tariff rate is 0.6 percent. Foreign investment is screened by the government, and foreign investment in land is restricted. In addition, state-owned enterprises distort the economy. Overall supervision of the banking sector is weak, and the sector remains subject to government influence.