Strong quarter three fuels positive growth outlook

DAR ES SALAAM: NATIONAL Bureau of Statistics (NBS) released the quarter 3 (Q3) 2025 real GDP estimate last month, indicating that the economy expanded by 6.4 per cent yearon-year, up from 6.3 per cent in Q2, as briefly explained herewith.

For those who don’t understand well the economic rationale for this expansion, construction (5.2 per cent to 6.5 per cent), agriculture (3.0 per cent to 4.1 per cent) and the accommodation sector (3.9 per cent y-o-y in Q2 to 6.7 per cent in Q3 were the primary drivers of growth, while financial sector activity remained resilient at 14.2 per cent.

The Q3 growth figure was consistent with previous projections, as shown by the NBS data analysis. Consequently, the 6.1 per cent estimate for 2025 remains unchanged. Own projections, based on Bank of Tanzania (BoT) reports and NBS data, suggest that headline growth will remain above 6.0 per cent in Q4, despite the aftermath of the October 29 general elections.

My evaluation, along with the data, indicates that growth will remain robust at 5.9 per cent in 2026, which is relatively consistent with the average of 5.8 per cent from 2015 to 2024. From an economic perspective, the NBS data published this January, indicates that Tanzania’s growth will be sustained by a robust infrastructure pipeline and a high demand for metals and minerals.

The actual construction industry growth will rise from 5.2 per cent in 2025 to 6.6 per cent in 2026, as evidenced by infrastructure. Our Metals & Mining team anticipates that the mining industry’s value will increase by 18.8 per cent, despite an estimated 34.2 per cent growth in 2025.

In fact, the US announced expanded cooperation with Tanzania focused on rare earth minerals on January 22, 2026, underscoring the strategic importance of these resources.

Meanwhile, ongoing investment across the sector will be driven by the growing interest in critical minerals, while elevated gold and copper prices will incentivise robust production.

The UK, the UAE and mainland China are also increasing their involvement in this sector, underscoring intensifying global competition and collaboration in the critical minerals arena. One may be curious about what the country will experience this year.

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In conclusion, I anticipate that growth will remain robust. This is primarily because fixed investment will continue to be the main driver of growth, supported by strong private investment and the government’s commitment to developing large-scale infrastructure and providing targeted support for strategic sectors.

Secondly, the country’s competitiveness in services exports is expected to improve through significant projects such as the Standard Gauge Railway, upgrades to airports and ports and expanded investment in Air Tanzania Corporation Limited (ATCL).

Concurrently, the government’s objective to broaden mineral exploration coverage and increase export earnings will be bolstered by increased investment in mining, including gold, copper and nickel, in response to ongoing elevated gold prices and rising demand for critical minerals.

In the interim, ongoing reforms to enhance agricultural and manufacturing capacity, including targeted VAT exemptions and customs duty relief for locally produced goods, will strengthen self-sufficiency and value-addition efforts.

It is undeniable that the bank’s loan documents and performance will remain instrumental in fostering business activity and investment this year, as the country’s financial landscape is characterised by sustained low inflation and rising liquidity. Inflation will remain contained with an average of 3.5 per cent.

This is a minor increase from 3.3 per cent in 2025 and remains at the lower end of the central bank’s 3.0-5.0 per cent target range. This will keep price pressures manageable for firms, according to my private assessment of the NBS figures that have been released.

In the interim, improved access to credit, resulting from increased liquidity in the banking sector, will stimulate the private sector’s lending and encourage industry expansion, ultimately leading to employment opportunities.

The momentum in Tanzania, as reflected in NBS data released last week of last month, could yield a number of broad-based economic benefits. However, given the space constraints, a consensus will be reached by focusing on five key points.

For non-economists, the number indicates that the country’s robust economic performance in the third quarter is indicative of a diverse array of resilient sectors supporting the economy’s ongoing expansion. According to recent data from the BoT and national statistics, the economy has been fuelled by key sectors, including agriculture, mining, construction and services, including tourism.

These sectors have collectively contributed to robust GDP growth that surpasses that of many regional peers. This suggests that the economy is not overly reliant on a single sector but is bolstered by a diverse range of activities, which will support more consistent future growth.

The country is well-positioned to maintain momentum into 2026 and beyond, given the sectors’ capacity to continue expanding amid global uncertainties. Continued macroeconomic stability is a critical factor in maintaining the economy’s momentum, as inflation remains within the central bank’s target range and interest rates are maintained at supportive levels.

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The BoT’s decision to maintain the policy rate at its current level, in my view, is indicative of its confidence in a stable exchange rate environment and low inflation, which in turn enhances the confidence of both consumers and investors. A stable macroeconomic environment is essential for long-term investment, whether domestic or foreign, as it mitigates uncertainty and lowers the cost of capital.

This environment facilitates the expansion of the private sector and household consumption, thereby establishing the foundation for structural transformation and sustained growth. While the momentum to continue in Tanzania after strong Q3 growth signals a good picture ahead, the expansion of private-sector credit, estimated to have reached 21 per cent of GDP by the end of 2025, is another substantial beneficiary of the country’s current growth momentum.

This virtuous cycle of growth is, in my view, facilitated by the deeper credit environment, which allows businesses, particularly SMEs, to invest, expand and employ.

Tanzania is demonstrating the impact of robust credit growth and investmentclimate reforms on actual economic activity, alongside increases in registered investment projects and capital inflows. This trend promotes inclusive growth and reduces unemployment by expanding productive capacity and creating jobs.

As the capacity and opportunity to create jobs rise, Tanzania’s development prospects are enhanced by its transition to a more industrialised economic structure and valueadded production.

Much as it is not widely spoken, the industry sector’s share of GDP has been elevated by national initiatives to increase domestic processing of raw materials and stimulate growth in manufacturing and construction.

These structural changes enhance export competitiveness and resilience to external disruptions by reducing dependence on raw exports and import-dependent consumption.

An economy that is progressively diversifying and moving up the value chain, as evidenced by the growing contribution of manufacturing and construction, is essential for sustainable long-term growth. Amidst all these benefits, it is a fact that the economic resilience and development prospects have been further bolstered by its external sector performance, particularly in tourism and exports.

Foreign exchange inflows have been bolstered by record tourism arrivals and rising earnings, while trade deficits have been reduced by stronger export performance. Strong global demand and effective marketing were the primary drivers of the nearly 3.9 billion US dollars in tourism revenue.

These external revenues fortify foreign reserves and maintain a stable balance of payments, thereby increasing the economy’s resilience to external shocks.

The country’s status as a regional growth leader can be further enhanced through continued integration into regional value chains and trade corridors. Looking at NBS-released data, the growth is not merely a temporary statistical achievement; rather, it reflects the country’s macroeconomic stability, structural diversification, investor confidence and economic resilience.

If these trends persist, the country is well-positioned to maintain above-average growth, expand productive capacity and enhance living standards.

The domestic prosperity is not the only benefit of this trajectory; it also reinforces Tanzania’s position as a regional economic anchor in East Africa, as illustrated by key comparative economic metrics.

The country’s real GDP growth rate for 2024–2026 is expected to be between 6.1 and 6.2 per cent, above the SSA average and placing it among the fastest-growing countries in the EAC. Uganda: 5.7–6.4 per cent, with potential for oil-led acceleration driven by agriculture and infrastructure; Rwanda: 7–7.2 per cent, with robust expansion in services and industry; Kenya: 4.7–5.6 per cent, with slower relative growth due to fiscal tightening and sectoral headwinds.