DAR ES SALAAM, June 27 (NNN-DAILYNEWS) — THE International Monetary Fund (IMF) has said Tanzania’s economy is projected to rebound to about 6.5 per cent over medium-term, assuming successful implementation of the authorities’ reform agenda.
The growth is projected to pick up to 5.4 and 6.0 per cent in 2024 and 2025, respectively, supported by improvements in the business environment and subsiding global commodity prices.
The IMF latest report stated that the economic recovery is expected to strengthen and the medium-term outlook is positive contingent on the implementation of the authorities’ reform agenda.
Inflation is expected to remain below the BoT’s 5 per cent target and enhanced revenue mobilisation efforts are expected to improve the fiscal outlook.
The headline inflation remained within Bank of Tanzania’s target of 3.1 per cent (year on year) in April, although core inflation ticked up to 3.9 per cent (year on year).
The current account deficit is projected to moderate over the medium-term as the global shocks subside and the authorities’ reforms start to pay off.
According to the Bank of Tanzania’s latest monthly economic report as a result, the current account deficit narrowed substantially to 2,456.6 million US dollars from 5,306.6 US dollars million recorded in the year ending April 2023.The IMF report said risks to the outlook are tilted to the downside.
The intensification of regional conflicts, increased commodity price volatility, an abrupt global slowdown or recession, natural disasters related to climate change, failure to address pressures in the foreign exchange market, and a poorly executed scale up of public investment projects could weigh negatively on the near-term outlook.
Risks to the medium-term outlook include complacency in reform implementation and spillovers from deepening geo-economic fragmentation. On the positive side, realisation of the Liquefied natural gas (LNG) project could boost investment and growth.
The country’s flagship Tanzania LNG project is set to process gas from fields operated by Equinor, Shell and ExxonMobil, producing 10 million metric tons per year. Economic activity is picking up despite challenges from the unfavorable global economic environment and domestic factors.
The real GDP growth picked up to 5.1 percent in 2023, from 4.7 per cent in 2022, on the back of strong growth in agriculture, mining, and financial services.
Presenting the state of the economy for 2023 in the National Assembly recently, the Minister of State in the President’s Office (Planning and Investments), Prof Kitila Mkumbo said the economy expanded by 5.1 per cent in 2023 despite the impacts of adverse global economic situation, and is projected to grow to 6 per cent this year, the government has said.
The main drivers of growth were strategic investments in energy and transport infrastructure, tourism and mineral exports as the government undertook measures to cushion the economy from adverse impacts of global economic uncertainties.
However, despite stellar growth of the economy, it was slightly below 5.2 per cent target for 2023 mainly because of the rise in production costs in some sectors, and pro- longed rains which affected agricultural production and damaged roads and bridges in some areas.
The minister hinted out that the situation was also compounded by the impact of monetary policy tightening in advanced economies, which increased cost of borrowing from global financial markets, contributing to tight credit conditions, negatively affecting production.
The growth slowed to 4.7 per cent in 2022 from 4.9 per cent in 2021, due in part to the impact of the war in Ukraine that sent commodity prices, notably on food and energy, soaring. — NNN-DAILYNEWS
