Industrial activity, trade demand drive up imports

DAR ES SALAAM: INDUSTRIAL demand and rising trade activities have fuelled higher imports, reflecting stronger production needs, expanding commercial engagement and sustained momentum in economic growth for a year ending June.

Imports of goods and services rose to 17.60 billion US dollars in the year ending June, up from 16.14 billion US dollars a year earlier, according to Bank of Tanzania (BoT) latest report.

Bank of Tanzania (BoT) Monthly Economic Review, said the surge in imports points to expanding industrial and commercial activity, with higher demand for equipment and inputs supporting production.

The report said it reflects a growing economy and rising trade engagement, though it may also put pressure on the country’s trade deficit and foreign currency reserves, underscoring the importance of managing import levels alongside domestic output.

Notably, oil imports making up about 17 per cent of total goods imports fell to 2.52 billion US dollars from 2.80 billion US dollars mainly due to easing global prices.

The report showed the decline suggests some relief on the country’s import bill, potentially helping to narrow the trade deficit and reduce pressure on foreign exchange reserves, while also lowering production and transport costs across sectors reliant on fuel.

On a monthly basis, goods imports rose to 1.28 billion US dollars in June, up from 1.01 billion US dollars in the same period month last year—suggests rising domestic demand, likely driven by economic expansion and increased industrial activity. Service payments rose to 2.89 billion US dollars in the year ending June, up from 2.36 billion US dollars the previous year, largely due to increased freight costs.

However, rising freight expenses also highlight global logistics challenges and could contribute to higher overall import costs, affecting the trade balance and inflation. On a monthly basis, the report showed, service payments rose to 250.1 million US dollars in June, up from 189.3 million US dollars in the same month last year, reflecting increased trade and logistics activity.

Meanwhile, the primary income account posted a wider deficit of 1.95 billion US dollars in the year ending June, compared to 1.65 billion US dollars the previous year implying higher outflows related to investment income, such as interest and dividends paid to foreign investors, which could signal growing external obligations and pressure on the current account balance.

On a monthly basis, the primary income account registered a deficit of 132.9 million US dollars in June slightly lower than the 145.6 million US dollars recorded in June last year.

The secondary income account recorded a surplus of 508.7 million US dollars in the year ending June, down from 620.9 million US dollars in the same period last year, largely due to a decline in personal transfers. On a monthly basis, the surplus stood at 30.7 million US dollars in June, compared to 38.3 million US dollars in June last year.

This decline implies reduced inflows from remittances or other personal transfers, which could affect household incomes and spending, especially for families reliant on funds from abroad.