Eswatini's economy is experiencing significant cost pressures due to a 51.2% increase in fuel prices since April 2026. The Ministry of Economic Planning and Development warned that persistent increases in domestic fuel prices, coupled with geopolitical tensions and disruptions to global supply chains, have driven up production costs and weakened export competitiveness. This has contributed to inflationary pressures that are constraining consumption demand. The ministry's FY2026/27 Second Quarter Performance Report highlights the economy's resilience and emerging vulnerabilities.
The report attributes the pressure largely to the ongoing Middle East crisis, which has disrupted international supply chains and driven up prices of essential commodities, particularly crude oil. Eswatini's dependence on imported energy exposes businesses and consumers to international price movements. Despite the challenging operating environment, Eswatini's economy recorded strong growth during the second quarter of 2026. Real Gross Domestic Product (GDP) expanded by 6.5% in the second quarter of 2026 compared to the corresponding period in 2025.
The growth was broad-based, with all three major economic sectors recording positive performances. The primary sector expanded by 9.3%, supported by improvements in agriculture, forestry, mining, and quarrying. Agriculture and forestry rebounded by 5.2%, reflecting improved output from crop production and forestry activities. Mining and quarrying registered an even stronger performance, expanding by 24.3%, largely supported by improved external demand, particularly for coal.
The secondary or industrial sector recorded the strongest overall sectoral growth, expanding by 11.6%. Manufacturing output increased by 14%, while electricity supply grew by 21.8%, providing considerable support to industrial activity. However, not all components of the industrial sector performed positively. Construction contracted by 7.9%, while water supply declined by 10.7%. The contraction in construction is particularly noteworthy given the importance of infrastructure development and capital investment.
The tertiary or services sector expanded by 4.1%. Accommodation and food services grew by 19.6%, while information, communication, and technology recorded a substantial 55.6% expansion. Professional services also increased by 8.1%. The Ministry of Economic Planning and Development's report provides an assessment of the domestic and international economic environment, highlighting both the economy's resilience and emerging vulnerabilities.
The fuel price increase presents a considerable challenge for Eswatini, whose dependence on imported energy exposes businesses and consumers to international price movements. The economy's growth momentum is expected to continue, but the fuel price shock could undermine the recovery. The government and businesses will need to navigate these challenges to ensure sustainable economic growth.
The Times of Eswatini reported that Eswatini attracted E1.85 billion in new investment projects and E170 million in foreign investment during the second quarter of 2026. The country has also made progress in reducing government arrears, which have declined to E2.7 billion over the past three years. However, the fuel price shock could impact the country's investment climate and economic growth prospects.
Key points
- Eswatini's economy faces mounting cost pressures due to a 51.2% increase in fuel prices since April 2026.
- The country's economy recorded strong growth during the second quarter of 2026, with real GDP expanding by 6.5%.
- The fuel price increase presents a considerable challenge for Eswatini, whose dependence on imported energy exposes businesses and consumers to international price movements.
