... Improve risk analysis –economist

MBABANE – The country’s economic output has de clined by 0.3 per cent in the fourth quarter 44 of 2021. )igures from the &entral 6tatistics 2ffice &62 depict that (swatini’s economic output contracted marginally by 0.3 per cent in the final quarter of 2021. This is despite the 0.1 per cent in the third quarter of 2021. This decrease in the economic output was influenced by the businesses challenges such as &29,' 19 and the picketing of work ers, which slowed down businesses production and economic performance. ,nvestopedia explains, ³(conomic production and growth, what *'3 represents, has a large impact on nearly everyone within the economy´.

DECLINE

:hen *'3 is on a decline, businesses cut back on hiring new employees or free]e hiring entirely. To cut costs and improve the bottom line, the manufac turer may stop buying new equipment, curtail research and development, and stop new product rollouts a factor in the growth of revenue and market share .

(xpenditures for marketing and ad vertising may also be reduced. These cost cutting efforts will impact other businesses, both big and small, which provide the goods and services used by the prominent manufacturer. (conomic Bulleting (B 9olume 40, from the 0inistry of (conomic 3lanning and 'evelopment states that this contrac tion was mainly underpinned by weak performance of four subsectors namely, the manufacturing, electricity supply, wholesale and retail as well as the pro fessional services. The manufacturing subsector had snags that spiralled the poor performance of the economy. $mong the snags disruptions was labour strife. ³6ugar manufacturing declined by 69.9 per cent to contribute 1.3 per cent to the overall decline due to production disruption in the form a labour strife in one of the sugar mills,´ details (B. The said sugar mill which experienced disruptions due to labour strife was 8bombo 6ugar /imited,

Mwhere workers started picketing in 6ep tember 30, 2022. $ccording to Thoko ]ani 0amba reporting at the Times of (swatini, the workers were demanding 11.5 per cent while the company offered five per cent. Talks between workers’ representatives, 6wa]iland $gricultural 3lantation :orkers 8nion 6$3:8 and company’s management, dragged for over a month now.

,t is worth mentioning that recently, the (swatini 6ugar $ssociation has openly admitted to facing challenges of supply and demand. ,n a press statement issued on 0arch 1, 2022, the company said, it finds itself in an unfortunate position of very low level of sugar stocks. Thus, the company has had to tightly manage and ration alise the distribution of available sugar among its customers both domestic and external. 0eanwhile, electricity supply fell by 69.5 per cent due to demand issue as companies operate less days in 'ecember and other disruptions. This contributed 0.27 per cent to the fall in *'3, states (B.$lso, wholesale and retail economic output contracted. ³8nderpinned by weak demand as a result of strained disposable incomes, it fell by 1.2 per cent in economic output to contribute 0.21 percent,´ reports (B.

3rofessional services further contribut ed to the decline. They decreased by 5.0 per cent and contributed 0.20 per cent towards the overall economy output. +owever, subsectors such as the manu facturing of beverages, financial and in surance as well as the growing of crops,

BABANE – The de cline in the gross domestic product is an indication that businesses should improve risk analysis.

This was shared by an (con omist who is a lecturer at 81 (6:$, 6anele 6ibiya, when he was contacted for comment.

³The drop in domestic prod uct was not a result of bad busi ness acumen, but was a global market phenomenal. 5ather, it is a sign of the times that businesses should improve risk analysis and management,´ he said. 5unning a business comes with many types of risk. 6ome

CHALLENGES

performed positively during the period, moderating the decline. $lthough, on a year on year comparison, the (swatini economy continued to expand, albeit at a slow pace, by 2.1 per cent in 2021 44 compared to the 3.9 per cent observed in 2021 43. :hile the country’s *'3 was on a decline, global commodity prices went on a hike. Brent oil in 2021 44 was trading at 86' 79.60 per barrel on av erage, reflecting a 9.2 per cent rise from the preceding quarter. (B explained this price increase for oil as a result of strong demand for this commodity in the midst of reduced supply, mainly petroleum products in line with the rebounding global economic activity. of these potential ha]ards can destroy a business, while others can cause serious damage that is costly and time consuming to repair. 'espite the risks implicit in doing business, risk analysis and management can anticipate and prepare, regardless of the si]e of their business.

This decline in domestic out put, he said, was an indicator of lagged impacts of &29,' 19 and unrest. &29,' 19 and the unrest were experienced in the previous quarters, but started showing cracks in the final quarter. Businesses felt the squee]e, as revenue contracted

EXPORTS

:hile on food prices, an increase was observed too. (specially on some of (swatini’s maMor exports such as beef and sugar. ³Beef was trading at 86' 5.87/kg on average, which reflected a 4.4 increase on a quarterly comparison.´

2n a year on year comparison the price for beef reflected a strong growth of 33.1 per cent in the same period. This was also supported by strong consumer demand for beef in the period, as well as increased input costs, which is linked to the to the continued global economic recovery, (B noted. +owever, the price of the (8 sugar fell on both the quarterly and annual comparisons. There were also contrasting developments within the 6outh $frican )utures (xchange 6$)(; , commodities including white mai]e, yellow mai]e and wheat in the period under review. $ll these commod ity prices went up when compared on a quarterly basis. 2nly the price of white mai]e fell when compared on an annual basis, while the others went up.

and implanted workers layoffs as they were not seeing returns.

+owever, 6ibiya noted that this situation decline in *'3 was a tricky situation and an unexpected one. ³,t is tricky because the global economy was showing growth. +ence, we missed an opportunity to grow because of lack of resil ient business strategies. Busi nesses’ supply chain reliance on &hina did not favour us as the country was on rolling basis of &29,' 19 lockdown. :hile on lockdown, no goods were being shipped, thus local businesses which relied, on &hina as a supply were hugely affected.