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- GDP (PPP):
- $6.2 billion
- 0.3% growth
- 1.9% 5-year compound annual growth
- $5,302 per capita
- Inflation (CPI):
- FDI Inflow:
Swaziland’s economic freedom score is 57.2, making its economy the 104th freest in the 2013 Index. Its score is unchanged from last year, with gains in fiscal and monetary freedom balanced by declines in four other components of economic freedom including the control of government spending and freedom from corruption. Swaziland is ranked 16th out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world average.
The Swazi economy has recorded erratic changes in economic freedom over the past five years. Undermining macroeconomic stability and development progress, poor management of public finance has aggravated the country’s fiscal crisis since 2011. The inefficient regulatory framework continues to curb the emergence of a dynamic private sector.
Implementation of deeper institutional reforms is critical to Swaziland’s prospects for long-term economic development and greater poverty reduction. Systemic weaknesses continue to undermine the protection of property rights and enforcement of anti-corruption measures. The judiciary remains vulnerable to political influence.
Swaziland is Africa’s last monarchy. King Mswati III rules subject to a constitution adopted in 2005 that includes some democratic elements and protections for human rights. The economy is closely linked to South Africa, the source of most imports and destination for most exports. Swaziland is part of the Southern African Customs Union (with Botswana, Lesotho, Namibia, and South Africa) and the Common Monetary Area (with Lesotho, Namibia, and South Africa). Much of the population depends on subsistence agriculture. The soft-drink concentrate, textile, and cane sugar industries are the leading export earners and private-sector employers. Coal and diamonds are mined for export. Swaziland has one of the world’s highest HIV/AIDS rates. Swaziland qualified for the African Growth and Opportunity Act’s apparel provision in 2001, and 30,000 new jobs in its apparel industry have since been created.
The judicial system is weak and vulnerable to corruption in an authoritarian environment. The commercial court system is inefficient, and investors often pursue out-of-court settlements. Delays are common, and the executive branch significantly influences decisions. Protection of patents, trademarks, and copyrights is inadequate. Mistrust of government is considerable due to widespread public sector corruption.
The top income tax rate is 33 percent, and the top corporate tax rate is 30 percent. Other taxes include a fuel tax and a sales tax. The total tax burden equals 23.8 percent of GDP. Government spending has risen to 40.3 percent of GDP. The budget is in deficit, and public debt is equivalent to 17.5 percent of total domestic output. Failure to raise cash through loans and aid transfers has led to sudden expenditure cuts, reducing fiscal confidence.
The regulatory framework remains burdensome, with many requirements that increase the overall cost of entrepreneurial activity. It takes more than 10 procedures and 50 days to launch a business. A formal labor market has not been fully developed, and informal labor activity remains substantial. The state influences prices through numerous state-owned enterprises and utilities. Inflation has been significant.
The trade-weighted average tariff rate is very high at 10.2 percent, and non-tariff barriers further constrain trade freedom. Although foreign investment is officially welcome, deficiencies in the investment regime such as heavy bureaucracy and inconsistency inhibit growth in much-needed long-term investment. The financial sector remains underdeveloped, and most of the population remains without access to formal credit.