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 By The Citizen Reporter
Dar es Salaam. Tanzania was one of the fastest growing economies in sub-Saharan Africa (SSA) last year, according to a new World Bank report.The report, however, warns of economic shocks in 2012 that will be more severe than those experienced during the previous global financial and economic crisis.
It lists the other fastest growing SSA economies as Ghana, Rwanda, Eritrea, Ethiopia, Mozambique, Nigeria, Angola, DR Congo, Zambia and Botswana. Warning of a possible slump in global economic growth this year, the Bretton Woods institution has called on all developing economies to prepare for harsher consequences than the 2008 crisis.
Figures in the 2012 Global Economic Prospects report show that Tanzania recorded the second fastest growth of 6.4 per cent in the EAC last year and the 11th most brisk in SSA. Rwanda led the EAC pack with a growth rate of 8.8 per cent, which was the second fastest in SSA after Ghana’s 13.6 per cent. The World Bank projects Tanzania’s economy to grow by 6.7 per cent this year, while Rwanda’s will expand by 7.6 per cent. The two growth leaders in East Africa are expected to grow by 6.9 per cent and seven per cent, respectively.
“Growth in Sub-Saharan Africa remained robust in 2011 at 4.9 per cent. Excluding South Africa, which accounts for over a third of the region’s GDP, growth in the rest of the region was even stronger at 5.9 per cent in 2011, making it one of the fastest growing developing regions,” reads part of the report. “Increased investment flows, rising consumer spending, and the coming on stream of new mineral exports in a number of countries should accelerate Sub-Saharan Africa’s growth to 5.3 per cent in 2012 and 5.6 per cent in 2013. Nonetheless, merchandise exports, tourism receipts, commodity prices, foreign direct investment and remittances are all susceptible to a Euro Area recession,” it further notes.
Last week, President Kikwete said in a statement that the national economy would expand by seven per cent this year. Treasury had forecast the economy to grow by 6.8 per cent last year, and Finance and Economic Affairs minister Mustafa Mkulo has been upbeat about it.
“The government has a strong view that the revised six per cent GDP growth projection for 2011 would be achieved and most likely surpassed,” Mr Mkulo informed the International Monetary Fund (IMF) in a fiscal and monetary operations letter last December, noting that the economy will grow by 7.2 per cent this year. In its Global Focus – 2012 report, Standard Chartered Bank says Tanzania’s economy grew by 6.1 per cent and will expand by 6.7 per cent in 2012. It predicts the country’s gross domestic product (GDP) to improve from next year at 7.5 per cent and slacken a bit to 7.3 per cent in 2014.
According to the document, 2012 should see an acceleration of GDP growth in the country, thanks to a recovery from drought, lower inflation, resumption of regional food exports and ongoing momentum in mining, gas, construction and agricultural sectors. The British bank further notes that despite the robust trend growth of a low base, Tanzania’s economic prospects are constrained by a substantial infrastructure deficit (poor roads, port congestion and intermittent power supply) and a halting approach to liberalisation...
“Developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects, says the World Bank in the Global Economic Prospects report.
The international financial institution has lowered its growth forecast for 2012 to 5.4 per cent for developing countries and 1.4 per cent for high-income countries (-0.3 per cent for the Euro Area), down from its June estimates of 6.2 and 2.7 per cent (1.8 per cent for the Euro Area), respectively. Global growth is now projected at 2.5 and 3.1per cent for 2012 and 2013, respectively.
Slower growth is already visible in weakening global trade and commodity prices. Global exports of goods and services expanded an estimated 6.6 per cent in 2011 (down from 12.4 per cent in 2010), and are projected to rise by only 4.7 per cent in 2012.
“Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time,” said Mr Justin Yifu Lin, the World Bank’s chief economist and senior vice president for Development Economics.
Developing countries have less fiscal and monetary space for remedial measures than they did in 2008/09. As a result, their ability to respond may be constrained if international finance dries up and global conditions deteriorate sharply.
To prepare for that possibility, Mr Hans Timmer, director of Development Prospects at the World Bank, said: “Developing countries should pre-finance budget deficits, prioritize spending on social safety nets and infrastructure, and stress-test domestic banks.”
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