Eswatini not spared from global spillovers
The Central Bank of Eswatini (CBE) Governor Dr Phil Mnisi says Eswatini was not spared from the global spillovers as they had impacted the economy in diversified ways ranging from supply chain disruptions, volatility in oil prices and lower food production, all culminating in inflationary pressures. Mnisi said the Kingdom saw the economy contracting by 1.6 per cent in 2020 before rebounding to 10.7 per cent in 2021.
He stated that the overall inflation also began an upward trajectory as food and fuel prices rose sharply during this period.
“Inflation is forecasted to reach 4.9 per cent in 2023 from 3.73 per cent (in 2021) and 4.8 per cent (in 2022),” he said.
The governor said asset quality as indicated through NPLs also rose to over 7 per cent over the period.
He also stated that such spillovers could have both negative and positive impacts on the economy and some of the recent global spillover effects to Eswatini include the Covid-19 pandemic, global warming effects, and geopolitical tensions, especially the war in Ukraine.
He said global spillover effects were precipitated by different policy paths and that it was important to mention that within the CMA, each central bank evaluates its policy direction as appropriate for its economy based on the assessment of their domestic, regional, and global factors, what they term “data-driven” decision-making whilst avoiding ‘significant’ policy deviations from the anchor economy.
Furthermore, Mnisi said the CMA had played a pivotal role in promoting regional economic integration, facilitating trade, and fostering price and financial stability.
He stated that the collective efforts of the central banks in the CMA had undoubtedly delivered a stable financial system and contributed to the growth and resilience of our economies.
Imperative
“It is therefore imperative to continue building on that, hence the need to collectively deliberate on issues impacting the region to ensure agility and efficiency in policymaking. The need for sharing experiences in the region cannot be overemphasized,” he said.
He also stated that recent macroeconomic developments had presented challenges for price stability and financial stability for central banks and hence monetary policymakers around the world continue to face difficult trade-offs in achieving these mandates.
He said the interconnectedness of the global economy had tremendously increased over the years and global spillovers affect all economies particularly emerging markets and developing economies (EMDEs), including the Common Monetary Area, especially given the economic stature of the anchor economy. We are gathered here today to discuss these spillover effects into the CMA region.