Report: GDP expands after rebasing

Dar es Salaam. Tanzania’s Gross Domestic Product (GDP) was 3.8 per cent bigger in 2015 than what was previously estimated, according to the new rebase and revised economic data published by the National Bureau of Statistics (NBS).

This means that the economic data estimates and forecasts published for the 2015 was lower than the actual economic base.

The base year for GDP calculations was changed to 2015 from 2007 and the NBS said the GDP growth for 2015 were subsequently revised down to 6.3 per cent from seven per cent previously.

The per capita GDP in the revised series depicts an increasing trend from Sh1.6 million in 2013 to Sh2.3 million in 2017.

The rebase report published on Monday on the NBS website shows that GDP at current prices for 2015 in base year 2015 was Sh94.3 trillion while GDP at current prices for 2015 in base year 2007 was Sh90.8 trillion.

However, this was lower than the expansion of 32 per cent recorded during the previous rebase held in 2013 to change the base year from 2001 to 2007.

After a rebase in 2013, GDP stood at Sh69.8 trillion ($41.33 billion), up from a previous estimate of Sh53 trillion.

The director of economic statistics at NBS, Mr Daniel Masolwa, said rebasing the GDP will ensure that economic activities, which were previously not incorporated on the economic data, are actually brought on board.

“We have been underestimating our economy,” he said.

He said rebasing of the GDP takes into account new transformations in the economy such as the ongoing mobile phone revolution in the country. “In the past, people were using MoneyGram and telegram money orders to send money. The advent of mobile money transfers has become an important economic activity, generating both taxes to the government and jobs,” he said.

However, he said these developments will not change the lives of ordinary people significantly even though he advised them to grab the opportunity.

“When farmers sell their yields and decide to keep the proceeds under their beds, they will never see change,” he stressed.

He said it was the government’s responsibility to put up the electricity infrastructure, among other social services, to enable the public make a stride.

He further noted that the economy, which was expected to grow at seven per cent this year is faring well, but the rate is reportedly nose-diving.

According to new data, the country’s economic growth was revised down to 6.9 per cent in 2016 and 6.8 per cent in 2017, than the earlier estimated growth of between 7 and 7.3 per cent respectively.

NBS says the 2015 revision aimed at enhancing the quality of national accounts statistics to better portray the performance of economic activities.

It will also ensure international comparability in accordance with the United Nations System of National Accounts 2008.

The revised GDP series compilation included part of output of the informal Sector and was aimed at replacing an old base year used to compile estimates.

Agriculture slips

According to the new data, the share of Agriculture, Forestry and Fishing activities slightly decreased to 26.7 per cent in the 2015 base year, compared to 26.8 per cent in the 2007 base year.

The report shows that the share of both crops, forestry and fishing gained during the revised year while the share of livestock was lowered down to 7.6 per cent in 2015, using base year 2015 from 9.7 per cent when using 2007 prices.

The value of agriculture, fishing and forestry went down to Sh25.2 trillion using base year 2015 from Sh26 trillion recorded when using 2007 base year.

However, the share of industry and construction increased to 24.5 per cent in new base year compared to 24.0 per cent recorded in the previous year.

The value of industry and construction gained to Sh23.1 trillion in 2015 when using 2015 prices from Sh21.8 trillion when using 2007 base year prices.

Services remained the major contributor to the economy with 40.4 per cent share when using 2015 prices from 47.4 per cent when using 2007 prices as the value gained to Sh38.1 trillion from Sh35.8 trillion respectively.

The Bank of Tanzania (BoT) director of economic research and policy, Dr Suleiman Misango, said the rebase and revise of the economy captured activities, which were not previously counted or included in the economy.

Dr Misango explained this when asked to comment on the revised and rebased economic data.

He stressed that rebasing had included some of the sectors, which were contributing to the economy, but were not registered officially.

“If you look at mobile phones in the 1990s, they were not a priority, but with the progress that has been registered lately, they are very important to human lives and economy as well,” he said.

In view of this, he said that when governments increase the size of the economy, they look for a mechanism that will capture all sources of revenue.

For the future, he said as the economy grows, more activities will be captured and will contribute to the GDP.

The chief executive officer of Economist Society of Tanzania (EST), Dr Blandina Kilama, said the rebase is important because it targeted the year, which had stable prices and how much each sector contributed to the country’s economy.

“I see no major changes in most of the sectors because shares of agriculture and service sectors experienced a slight fall while industry and construction share expanded to 24.5 per cent in 2015 from 20.2 per cent in 2007,” she said.

The share of taxes on products also went up to 8.3 per cent in 2015 from 6.8 per cent in 2007.

The GDP growth rates at constant 2015 prices from 2013 to 2017 indicate the highest growth of 6.9 per cent in 2016 while the lowest growth of 6.2 per cent was in 2015.

The main contributor to GDP growth of 6.8 per cent in 2017 was Industry and Construction (40.3 per cent) followed by Services (31.3 per cent) and Agriculture, Forestry and Fishing (23.0 per cent).

Per Capita GDP in the revised series depicts increasing trend from Sh1.62 million in 2013 to Sh2.3 million in 2017.

“The 2007 benchmark is out of date and does not reflect the structural changes that have been occurring in the economy in the recent past,” says the NBS report.

The new revised and rebased data are aimed at integrating the changes that have happened in the patterns of production, consumption and investment in the economy and update relative price changes of various products over the period.

They are also targeting to update the list of products as continuous developments and innovations lead to new products to appear in the market while obsolescence causes old products to disappear from the market and incorporate current data available from administrative records, censuses and surveys.

The revision and rebase also aimed at complying with the 2008 System of National Accounts and other United Nations’ revised classifications.

Compilation of the new GDP series has utilised broader coverage of data from most recent household-based surveys such as Household Budget Survey 2011/2012, Integrated Labour Force Survey 2014 and Agricultural Sample Census 2007/08.

Others were the Study on Non-profit Institutions Serving Households 2015, Census of Industrial Production 2013, National Panel Survey 2014, study on Trade Margins 2015 as well as Employment and Earnings Survey 2015 and administrative data.