Tanzania flag Tanzania: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Tanzania has experienced strong growth in recent years, with an average growth of 6.5% in the last decade, thanks to a high level of exports in natural resources, developments in the tertiary sector (telecommunications, transportation, finance, tourism) and the establishment of a liberalisation programme. However, due to the Covid-19 pandemic and the collapse in tourism induced by the travel restrictions, economic activity slowed down, GDP growth declining from 7% in 2019 to 4.8% in 2020 and 4% in 2021 (IMF). Tanzania was nonetheless one of the rare economies not to fall into economic recession, thanks to gold exports and only light health restrictions. Economic growth is expected to pick up to 5.1% in 2022 and 5.5% in 2023 (IMF), supported by private consumption. Downside risks include weak fiscal metrics, elevated debt stocks and ongoing uncertainty over the pandemic (Focus Economics).

Even though Tanzania did not put in place strict lockdown measures, its economy decelerated in 2020 and 2021 due to a major slowdown in regional activity and trade, along with a severe downturn in the tourism sector. To mitigate the health and socioeconomic effects of the pandemic, the authorities implemented a comprehensive emergency response plan, the Covid-19 Socioeconomic Response Plan (TCRP), which includes a vaccination campaign. The country benefitted from emergency financial assistance under the IMF’s Rapid Credit Facility (RCF). Increased expenditures caused public deficit to widen to -3.4% GDP in 2021 (from -1.9% GDP in 2020), and it is expected to further increase to -3.9% GDP in 2022 (Coface). Fuelled by ongoing infrastructure projects, public debt increased from an estimated 39.1% GDP in 2020 to 39.7% GDP in 2021, and it is forecast to gradually decrease to 39.6% GDP in 2022 and 38.9% in 2023 (IMF). Tanzania’s risk of external and public debt distress remains moderate. Inflation decreased from an estimated 3.3% in 2020 to 3.2% in 2021, and it is expected to slightly increase to 3.4% in 2022 and 3.5% in 2023 (IMF). Despite higher imports and high commodity prices, inflation remains below the central bank's 5% target (Coface). The priorities are to carry on the vaccination campaign, enhance social safety nets and improve transparency, public resource management and administration. The government has adopted an ambitious development plan (Tanzania Development Vision 2025) focused on supporting the private sector, industrialization and creation jobs. It aims to improve the business climate by upgrading infrastructure, facilitating access to finance and advancing the level of education. Zanzibar also revealed a five-year USD 2 billion plan to diversify away from the tourism industry (Focus Economics). Long-standing structural problems include mismanagement of public finances and an underdeveloped legal framework that undermines the effectiveness of regulation. In addition, the country remains heavily dependent on foreign aid, with almost a third of its budget coming from international aid.

The poverty rate, which was as high as 60% in 2007, was estimated at 49.5% in 2020 (World Bank). Poverty and income inequality remain high despite high economic growth. The country also has a high HIV/AIDS rate and many people lack access to basic services (water, electricity and healthcare). Additionally, the quality of primary health care has been negatively affected by a range of factors, including shortage and poor distribution of health workers, poor access to essential medicines and poor infrastructure. According to World Bank data, unemployment rate was 2.5% in 2020.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 60.81e64.40e69.2474.5480.08
GDP (Constant Prices, Annual % Change) 7.0e4.8e4.05.15.5
GDP per Capita (USD) 1,080e1,110e1,1591,2121,264
General Government Gross Debt (in % of GDP) 39.0e39.1e39.739.638.9
Inflation Rate (%) 3.4e3.3e3.23.43.5
Current Account (billions USD) -1.54-1.14e-2.24-2.86-2.53
Current Account (in % of GDP) -2.5-1.8e-3.2-3.8-3.2

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Tanzanian Shilling (TZS) - Average Annual Exchange Rate For 1 GHS 545.64512.31493.70442.40409.98

Source: World Bank, 2015

 

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Latest Update: April 2022