Tanzania economy to ‘grow at 6.6pc in 2019’

Wednesday February 6 2019


By Mnaku Mbani & Rosemary Mirondo @TheCitizenTZ news@tz.nationmedia.com

Dar es Salaam. The African Development Bank (AfDB) has published the continental economic outlook, which shows Tanzania’s economy growing at an estimated 6.6 per cent in both 2019 and 2020.

In 2018, the economy grew at an estimated 6.7 per cent, with the services sector the main contributor to the growth, according to the report.

According to the outlook, other East African countries, except Burundi, will experience upward economic growth trends over the next two years, with Rwanda leading by 7.8 per cent in 2019 from 7.2 per cent in 2018.

Uganda will record positive growth of 5.5 per cent this year from 5.3 per cent last year, while Kenya will record 6 per cent growth this year from 5.9 per cent last year.

The Burundian economy will be the only one experiencing a downward trend in EA, as it is estimated to grow at 0.4 per cent this year from 1.4 per cent last year while South Sudan economy will gain to 2.6 per cent this year from 1.5 per cent last year.

The outlook says Tanzania’s monetary policy remained accommodative, with increased domestic liquidity and reduced lending rates to stimulate private credit growth.


One of the development challenges on the social front is youth unemployment in the country, which increased to 7.3 per cent in 2016, compared with 5.7 per cent in 2012.

However, AfDB’s projections differ with those of the government, which shows the economy grew by 7.0 per cent last year and will record similar growth 2019.

Responding on the report, the director of economic research and policy at the Bank of Tanzania (BoT), Dr Suleiman Misango, said: “Until we know the basis for their projections, it is hard to comment.”

Nonetheless he said the BoT still believed that own projections were credible.

The minister for Finance and Planning, Dr Philip Mpango, has said in the past that the economy grew at 7.1 percent in 2017 compared to 7.0 percent in 2016.

He said the GDP growth from January to June 2018 was estimated at 7.0 per cent compared to 6.3 per cent in the same period 2017.

Repoa executive director Donald Mmari said it depends when the projections by AfDB were made, because earlier before, the global growth trends were high.

However, he noted that since the start of US and China trade war, business growth for China revised downwards, which automatically affected the growth of African economies, including Tanzania’s.

“But in six months or one year, we should expect things to change as commodity prices for metal and gold are going up,” he told The Citizen.

Looking forward, AfDB says Tanzania is in the right track to become the fastest growing economy in the continent due to political stability, abundant natural resources, geographic location, and development potential for tourism.

The outlook reveals that the Export Processing Zones (EPZ), which from 2008, accelerated export manufacturing and helped the country achieve structural transformation.

It says, since establishment, the EPZs helped to attract close to $1 billion in FDIs and stimulated manufacturing sector.

According to the AFDB outlook, public debt increased to an estimated 39.3 per cent of GDP in 2018 from 38.2 per cent in 2017. The debt is about 74.9 per cent of total public debt in 2018.

“The risk of debt distress remains low because public external debt, at 34.5 per cent of GDP, is mostly concessional,” the bank says.

Challenges ahead

AfDB says despite the positive outlook, the growing private sector concerns about economic policy uncertainty and increased domestic arrears could derail the government’s fiscal consolidation and harm the private sector growth.

Key economic development challenges include slow progress towards inclusive growth, infrastructure bottlenecks, and vulnerability to climate change.