Down­ward re­vi­sion due

Finweek English Edition - - Economic Trends & Analysis - HOWARD PREECE

THE ECON­OMY OF Swazi­land, ar­guably South Africa’s most beau­ti­ful neigh­bour, recorded a mod­est but use­ful im­prove­ment in growth last year. That’s the con­clu­sion of the an­nual re­port from the ex­ec­u­tive board of the In­ter­na­tional Mon­e­tary Fund.

But while that re­port has only just been of­fi­cially pub­lished, much of the IMF in­spec­tion team’s work took place be­fore the erup­tion of the global fi­nan­cial credit cri­sis. So the fund’s con­clu­sions – mildly more up­beat than in the pre­vi­ous two years – may now need some down­ward re­vi­sion.

Fur­ther, Swazi­land’s for­tunes are heav­ily linked to those of SA. Given the con­cerns about clear slow­ing of busi­ness ac­tiv­ity in SA, that’s not good news for a small na­tion vi­tally linked to this coun­try. The IMF says: “Growth in Swazi­land re­cov­ered mod­er­ately in 2007 to 3,5%, but inflation es­ca­lated into dou­ble dig­its, ini­tially ow­ing to high food and fuel prices.” Well, that lat­ter prob­lem has hit al­most ev­ery coun­try.

How­ever, the IMF adds: “Sus­tained high rates of growth re­main elu­sive, clouded by a low fixed in­vest­ment cli­mate, the slow pace of eco­nomic re­forms, de­te­ri­o­ra­tion of pref­er­en­tial treat­ment of Swazi­land’s main ex­ports and ris­ing fi­nan­cial sec­tor vul­ner­a­bil­i­ties.” The re­port com­ments: “The years of per­sis­tently low growth have led to high un­em­ploy­ment and ris­ing poverty, made worse by the ris­ing preva­lence of Aids.”

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