Keypoints:
- Services and manufacturing drove modest economic growth in 2025
- Inflation eased, offering limited relief to households and businesses
- Structural weaknesses and unemployment remain unresolved
ESWATINI’S economy recorded modest but uneven progress in 2025, buoyed by gains in services, manufacturing and private sector activity, while deep-seated structural challenges continued to constrain inclusive growth, according to a year-end review published by the Times of Eswatini.
Economic indicators over the past 12 months point to a gradual recovery from earlier slowdowns, with improved output across selected sectors helping stabilise business confidence. However, analysts caution that the gains remain fragile, heavily dependent on reform momentum, regional trade conditions and the pace of job creation.
Growth driven by services and manufacturing
Manufacturing, construction and services emerged as the strongest contributors to economic activity in 2025, offsetting weaker performance in primary sectors such as mining and forestry. Business services, financial activity and retail trade benefited from improved consumer demand and easing inflationary pressures during the year, the Times of Eswatini reported.
The economy also gained support from increased private investment, particularly in export-oriented industries seeking to take advantage of regional market access under the African Continental Free Trade Area. While overall growth remained moderate, the diversification away from primary commodities was viewed as a positive structural shift.
Inflation eases, but households remain stretched
Inflation trended downward for much of 2025, easing pressure on both households and businesses. More stable food prices and slower increases in utility costs contributed to the moderation, helping firms manage operating expenses and stabilise pricing strategies.
Despite this easing, consumer spending remained constrained by stagnant wages and high unemployment. Businesses in retail and hospitality reported cautious demand, reflecting ongoing pressures on disposable incomes.
Private sector adapts amid reform gaps
The private sector continued to demonstrate resilience, particularly among micro, small and medium-sized enterprises. Increased use of digital tools, mobile payments and online platforms supported business continuity and market access, especially for youth-led enterprises.
However, business leaders cited persistent barriers, including limited access to affordable finance, infrastructure gaps and slow regulatory reform. State-owned enterprises remain dominant in key sectors, and delays in restructuring continue to weigh on competitiveness and investor confidence, according to the Times of Eswatini analysis.
Unemployment and structural risks persist
Unemployment remains one of Eswatini’s most pressing economic challenges, particularly among young people. Job creation has lagged behind population growth, raising concerns about long-term social and economic stability.
Economists also warn that fiscal pressures linked to volatile Southern African Customs Union revenues could limit public investment unless broader revenue reforms are implemented. Without sustained structural changes, analysts caution that growth could remain shallow and vulnerable to external shocks.
Outlook: cautious optimism into 2026
Looking ahead, Eswatini’s economic outlook for 2026 hinges on the government’s ability to accelerate reforms, stimulate private sector-led job creation and strengthen productivity across sectors. Continued investment in skills development, infrastructure and digital transformation is widely seen as critical to sustaining momentum.
While 2025 marked a year of cautious recovery, the underlying message from the business community is clear: without deeper structural reform, today’s gains may prove difficult to sustain.
