Current account deficit narrows on exports gain, tourism rebound

DAR ES SALAAM: THE current account deficit narrowed over the past year, supported by stronger export earnings and a rebound in tourism, signalling improved resilience in key foreign exchangegenerating sectors.

The deficit dropped to 1.93 billion US dollars in the year ending January, from 2.44 billion US dollars a year earlier, as rising receipts from goods exports—particularly gold—and increased tourist arrivals eased pressure on the balance of payments.

According to the latest Monthly Economic Review by the Bank of Tanzania, the improvement came despite a rise in imports, with the overall import bill moderated by lower global oil prices.

The review notes that while imports increased, the growth in the import bill was tempered by lower global oil prices.

During the period under review, exports of goods and services increased by 12.7 per cent to 18.17 billion US dollars compared with the corresponding period last year.

The exports of goods, which account for the largest share of total exports, rose by 16.7 per cent to 10.79 billion US dollars from 9.25 billion US dollars in the same period last year.

The main contributors to this growth were gold, manufactured goods, tobacco and coffee, which together accounted for about 70 per cent of total goods exports.

According to the report, gold exports increased by 39.3 per cent to 4.90 billion US dollars in the year ending January from 3.52 billion US dollars in the corresponding period last year, largely explained by favourable global prices coupled with increased production.

The exports of manufactured goods rose by 28.9 per cent to 1.70 billion US dollars from 1.32 billion US dollars, supported by increased demand from neighbouring countries. Meanwhile, traditional exports increased by 6.9 per cent to 1.58 billion US dollars in the year ending January compared with the corresponding period last year.

The performance was mixed across commodities, with tobacco recording notable growth driven by both price and volume effects and coffee benefiting mainly from favourable prices.

In contrast, cashewnut exports declined due to price and volume effects. On a monthly basis, goods exports amounted to 1.08 billion US dollars in January from 737.7 million US dollars in January last year largely on account of strong performance in gold and manufactured goods.

During the period under review, service receipts increased by 7.2 per cent to 7.37 billion US dollars from 6.87 billion US dollars recorded in the corresponding period last year.