Growth reaches 5.6 per cent-BoT

DAR ES SALAAM: TANZANIA’S economy has demonstrated robust growth in 2024, with Mainland Tanzania achieving a 5.6 per cent growth rate, exceeding the projected 5.4 per cent. Zanzibar’s economy also performed well, growing by 7 per cent in the first three quarters of the year.

The Bank of Tanzania (BoT), in its Monetary Policy Statement Mid-Year Review 2024/2025, projects continued strong growth for Mainland Tanzania in the second half of the 2024/25 fiscal year, forecasting a real GDP growth of around 6 per cent.

The central bank attributed these positive trends to strong performances in agriculture, finance and insurance, transport and construction.

Improvements in tourism, livestock and infrastructure projects, such as the ongoing construction of the standard gauge railway, roads, bridges and airports, have also contributed to economic expansion.

The stable power supply and growth in transport and logistics services are expected to further drive economic performance. Agriculture was the largest contributor to economic growth, accounting for 15.9 per cent.

Notable improvements were observed in the production of cash crops, particularly cashew nuts, tobacco and cereals.

Cashew nut procurement reached its highest level in the past five years, with farmers benefiting from better prices due to the introduction of the online auction system by the Tanzania Mercantile Exchange.

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The financial and insurance sectors, electricity and information and communication activities also registered the highest growth rates.

Meanwhile, prudent monetary and fiscal policies, stable food prices and moderate petroleum product prices helped control inflation.

Food inflation stood at 2.8 percent in the first half of 2024/25, down from 4.6 per cent in the same period of 2023/24, while core inflation increased to 3.2 from 2.5 per cent.

Inflation is expected to remain subdued in the second half of 2024/25, averaging around 3 per cent, while core inflation is projected at 3.8 per cent. In Zanzibar, inflation is expected to remain below the medium-term target of 5 per cent.

Prudent economic policies, adequate food supply, a stable exchange rate and moderate global commodity prices are expected to keep inflationary pressures low.

The external sector of the economy showed improvement in the first half of 2024/25, supported by favourable global and domestic economic conditions.

The current account balance recorded a deficit of 785.3 million US dollars, almost half of the deficit recorded in the corresponding period in 2023/24, mainly due to improved exports, particularly in tourism, gold, cashew nuts and tobacco.

On an annual basis, the current account deficit stood at 2.11 billion US dollars (2.7 per cent of GDP) in 2024, compared to 2.96 billion US dollars (3.7 per cent of GDP) in the previous year.