Economic outlook suggests rising fuel and food costs will strain household budgets and business operations following the latest Central Bank of Eswatini policy update.
Reading Time: 2 minutes While Central Bank of Eswatini (CBE) Governor Dr Phil Mnisi said global growth slowed to 3.4% last year, economist Sanele Sibiya said it was expected to dip further to 3.1% this year.. This is largely due to the Middle East conflict.. Sibiya said inflationary pressures remained elevated, with oil and food prices driving costs upward.. He was reacting to the governor’s address when delivering his annual monetary policy statement at the
CBE Complex on Thursday.. The theme for this year’s policy statement was ‘Monetary policy in a time of uncertainty and heightened geopolitical tensions’.. Sibiya said, as a result, businesses will face higher import costs, with consumers and business alike having to contend with rising fuel costs and food prices.. This, he said, will dampen domestic and foreign demand as disposable income gets eroded.. South Africa, which is the country’s largest trading partner, grew modestly at
1.1% in 2025 and is forecast to remain subdued.. Sibiya noted that the South African Reserve Bank (SARB) lowered its inflation target to 3% and cut interest rates, but energy price risks persist.. “These factors elevate risks of poor demand for local produce, trade flows may weaken and monetary policy decisions must align with the Common Monetary Area (CMA) peg, limiting flexibility.. Businesses dependent on South African markets will need to brace for slower demand,
while consumers will feel the spillover of energy-driven inflation,” the economist said.. Sibiya noted that the country’s economy grew strongly at 5.6% last year, driven by the services sector, with inflation moderating to 2.6%.. He said the Central Bank maintained a stable policy rate at 6.75%, supporting credit growth.. READ MORE | IDCE strengthens renewable energy investments through Solar Indaba However, he said inflation is forecast to rise to 3.3% this year due to global
oil prices and supply chain disruptions.. The economist said businesses benefited from cheaper credit and strong demand, but must prepare for tighter conditions if rates rise.. He noted that consumers enjoyed lower inflation, but higher transport and food costs are expected to squeeze household budgets.. Further, he noted that the banking sector expanded, with assets rising to 16.6% and deposits up 20.5%, while liquidity remained strong.. Profitability, however, contracted slightly and non-performing loans improved marginally..
For businesses, he said this meant continued access to credit and stable banking services, though banks may tighten lending if profitability pressures persist.. “Consumers benefit from strong deposit growth and financial stability, but should remain cautious about borrowing,” added Sibiya.
fuel costs, Eswatini economy, monetary policy, inflation, Sanele Sibiya, business demand, Central Bank of Eswatini