- Tanzanian economy grew by 6.7 per cent during the first three quarters of last year, due to output growth on construction, trade and repair, agriculture and manufacturing.
Dar es Salaam. Tanzania’s economy has continued to show a relatively strong performance, after recording an output growth of 6.7 per cent during the first three-quarters of last year.
However, this is slightly lower than the growth rate of 6.8 per cent recorded in the first three-quarters of 2017, as stated in the Bank of Tanzania’s Monetary Policy Statement for February 2018. According to the central bank’s Monetary Policy Statement (MPS) for February 2019 published recently, activities that largely contributed to output growth were construction; trade and repair; agriculture and manufacturing.
The statement maintains that real GDP was estimated to grow by 7.2 per cent in 2018, and 7.3 per cent in 2019. This would be supported by public investment – particularly implementation of mega infrastructure projects; recovery of the global economy, and expected favourable weather conditions.
However, the projected growth for 2018 and 2019 differ from that of the African Development Bank (AfDB) which was put at 6.8 per cent for 2018, and 6.6 per cent for 2019.
“Transformation of the economy through the industrialization strategy – with great focus on manufacturing industries to promote diversification and value-addition in output – is expected to add impetus to economic growth,” BoT says.
Also, initiatives to improve value-addition in minerals and the establishment of a minerals stock market, as well as agricultural modernization through improved agro-inputs, irrigation schemes and enhancing extension services will boost growth.
Other stimulants of growth in the medium-to-long-term are an increased transparency in doing business, and faultless management of natural resources.
The statement further notes that the recovery in private sector credit growth due to improving business environment and measures to reduce risk and nonperforming loans, will further induce growth.
Headline inflation is expected to remain around the medium-term target of 5 per cent in the second-half of 2018/19, supported by continued improvement in food supply, reduction in the production costs on account of reliable and affordable power supply.
During the first-half, inflation was hovering at below the medium-term target of 5.0 per cent – and was within the EAC and SADC convergence criteria of not more than 8.0 per cent and 7.0 per cent, respectively.
This was due to adequate food supply, stable exchange rates and sustained prudence of monetary and fiscal policies.
Core inflation – inflation that excludes food and energy –averaged 2.3 per cent, compared with the 1.7 per cent recorded in the corresponding period of 2017/18.
However, upward economic risks remain – largely due to possible rise in oil prices, following agreement among OPEC member countries to cut down production.
The government revenue deposited at the BoT was Sh8.7 trillion, representing 95.3 per cent of the target. This was largely due to increased use of technology in domestic tax mobilization by the Tanzania Revenue Authority, and increased non-tax revenue collection.
Expenditure on a cash basis amounted to Sh9.2 trillion, of which development expenditure was Sh2,326.9 billion.