Economy - overview: A small, landlocked kingdom, Swaziland is bordered in the north, west and south by the Republic of South Africa and by Mozambique in the east. Swaziland depends on South Africa for 60% of its exports and for more than 90% of its imports. Swaziland's currency is pegged to the South African rand, effectively relinquishing Swaziland's monetary policy to South Africa. The government is dependent on customs duties from the Southern African Customs Union (SACU) for 49% of revenue; income tax accounts for 27% and a valued added tax for 19% of revenues. Swaziland is a lower middle income country, but its income distribution is highly skewed, with an estimated 20% of the population controlling 80% of the nation’s wealth. As of 2017, more than one-quarter of the adult population was infected by HIV/AIDS; Swaziland has the world’s highest HIV prevalence rate.
Subsistence agriculture employs approximately 70% of the population. The manufacturing sector diversified in the 1980s and 1990s, but manufacturing has grown little in the last decade. Sugar and soft drink concentrate are the largest foreign exchange earners. Mining has declined in importance in recent years. Coal, gold, diamond, and quarry stone mines are small scale, and the only iron ore mine closed in 2014.
With an estimated 28% unemployment rate, Swaziland's need to increase the number and size of small and medium enterprises and to attract foreign direct investment is acute. On 1 January 2015, Swaziland lost its eligibility for benefits under the US African Growth and Opportunity Act after failing to meet benchmarks relating to workers’ rights.
The IMF forecasted that Swaziland’s economy will grow at a slower pace in 2017 because of a region-wide drought, which is likely to hurt Swaziland’s revenue from sugar exports and other agricultural products; tourism and transport sectors will also decline. Overgrazing, soil depletion, drought, and floods are persistent problems. Swaziland’s revenue from SACU receipts also are projected to decline in 2017, making it harder for the government to maintain fiscal balance.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on January 20, 2018
