- GDP (PPP):
- $11.3 billion
- 0.2% growth
- 2.0% 5-year compound annual growth
- $9,884 per capita
- Inflation (CPI):
- FDI Inflow:
Eswatini’s economic freedom score is 54.7, making its economy the 132nd freest in the 2019 Index. Its overall score has decreased by 1.2 points, with plunging scores for fiscal health and property rights overwhelming increases in government integrity, trade freedom, and judicial effectiveness. Eswatini is ranked 23rd among 47 countries in the Sub-Saharan Africa region, and its overall score is just above the regional average but below the world average.
Popular discontent with chronic mismanagement of public finances, abysmal labor conditions, and resistance by the elites to demands for democratic reform were not mitigated by the king’s unilateral decision to change the country’s name. Eswatini needs structural reforms to improve infrastructure, boost agricultural productivity, and increase economic diversification to attract investment. Bureaucratic inefficiency and corruption affect many aspects of the economy. Judicial enforcement of contracts and property rights is vulnerable to political interference.
Eswatini (formerly Swaziland) gained independence from the United Kingdom in 1968. King Mswati III, who changed the country’s name in April 2018, is Africa’s last absolute monarch. Political parties are banned, and rights groups accuse the government of imprisoning journalists and pro-democracy activists. Chiefs loyal to the king pick parliamentary candidates, and international observers declared the 2018 elections to be not credible. Eswatini has the world’s highest HIV/AIDS rate, but the rate of new infections has declined. The country depends on South Africa for the vast majority of its trade. Approximately 70 percent of the population works in subsistence agriculture, and unemployment is high. Manufacturing was diversified in the 1980s and 1990s but has grown little in the past decade.
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. The constitution provides for an independent judiciary, but the king’s absolute power to appoint judges limits judicial independence. Corruption is a major problem. The legal and regulatory environments are underdeveloped, opaque, and inconsistent.
The top individual income tax rate is 33 percent, and the top corporate tax rate is 28 percent. Other taxes include fuel and sales taxes. The overall tax burden equals 25.5 percent of total domestic income. Over the past three years, government spending has amounted to 33.9 percent of the country’s output (GDP), and budget deficits have averaged 7.6 percent of GDP. Public debt is equivalent to 29.2 percent of GDP.
Saddled with an inefficient regulatory environment, Eswatini’s private sector faces considerable challenges. Various regulatory requirements increase the cost of carrying out sustainable entrepreneurial activity, undercutting development of dynamic private activity. A formal labor market has not been fully developed. Although the IMF has recommended reductions in subsidies and transfers, significant economic reform appears unlikely.
The combined value of exports and imports is equal to 102.2 percent of GDP. The average applied tariff rate is 1.2 percent, but nontariff barriers persist and deter development of more dynamic trade activity. Foreign investment is screened, and state-owned enterprises distort the economy. Overall supervision of Eswatini’s banking sector is weak, and the sector remains subject to government influence.