Economic Challenges

Eswatini's Economic Challenges:

An Update as of November 2025

Eswatini, a lower-middle-income country with a population of approximately 1.2 million and a GDP per capita of around $3,898 (2024), faces persistent structural economic hurdles despite modest recovery signals. The economy, heavily reliant on services (over 50% of output) and manufacturing (about one-third, including sugar and soft drink concentrates), grew by 3% in 2024, down from 3.5% in 2023, hampered by a severe drought and weaker services output. The International Monetary Fund (IMF) projects a rebound to 4.3% growth in 2025 and 4.6% in 2026, driven by domestic investments and manufacturing recovery, though this outpaces regional averages but falls short of addressing deep-seated issues. Inflation eased to 4% in 2024, supported by lower food prices, but vulnerabilities to external shocks and domestic inefficiencies persist.Key challenges stem from high unemployment, entrenched poverty, fiscal pressures, and limited diversification. The economy's dependence on volatile Southern African Customs Union (SACU) revenues— which fund over 20% of the budget—exacerbates instability, with a projected widening fiscal deficit in FY2025. Below is a summary of major challenges, followed by key indicators.Major Economic Challenges

• High Unemployment and Youth Joblessness: Unemployment stands at 34% overall, with youth rates (ages 15-24) at 56-58% as of 2023, the highest in the Southern African Development Community (SADC). Limited formal job creation, a skills mismatch in education, and an overabundance of state-owned enterprises (SOEs) stifling private sector competition contribute to this. With over half the population under 25, this risks social unrest and a lost demographic dividend.
• Poverty and Inequality: About 55% of the population lives below the $4.20/day poverty line (PPP 2021), unusually high for a lower-middle-income nation, affecting rural areas hardest due to climate shocks like droughts. The Gini coefficient of 54.6 reflects extreme inequality, worsened by unequal access to services and opportunities. Food insecurity impacts one-fifth of households.
• Fiscal and Debt Pressures: The fiscal deficit narrowed slightly to 1.3% of GDP in FY2024/25 but is expected to widen amid rising wage bills, capital spending, and interest payments outpacing SACU inflows. Public debt reached 40.5% of GDP by end-2024, with domestic arrears to the private sector at 3.5% of GDP, eroding business confidence. SOEs drain resources through inefficiencies and subsidies.
• Sectoral and Structural Weaknesses: Agriculture, employing 25% of the workforce, contracted due to the 2024 drought, while manufacturing faces global trade pressures (e.g., potential U.S.-China trade war spillovers). Low financial inclusion—37% of adults unbanked—hampers growth, and the business environment is rated "mostly unfree" due to regulatory hurdles and corruption perceptions. Human capital gaps, including high HIV prevalence, stunting, and poor education quality, limit productivity.
• External Vulnerabilities: As a small open economy, Eswatini is exposed to global commodity price swings, climate events, and SACU revenue volatility (down 14% in 2024). The current account surplus shrank to 0.8% of GDP in 2024, with international reserves covering just 2.4 months of imports. Regional trade disruptions and slow diversification into tourism or renewables add risks.

Key Economic Indicators (2024 Actuals and 2025 Projections)

Policy recommendations from the IMF and World Bank emphasize fiscal consolidation, SOE reforms, digital economy investments, and climate-resilient agriculture to unlock growth.

However, implementation lags amid political constraints. For visuals, recent World Bank reports feature charts on poverty trends and sectoral contributions (e.g., see their July 2025 Economic Update infographics).