UN body projects GDP growth for Tanzania as Africa slips into recession

Wednesday November 25 2020
GDP PIC
By Alawi Masare

Dar es Salaam. Tanzania is among four Eastern African countries projected to grow their economies this year as the continent is expected to go into recession prompted by Covid-19 pandemic.

According to the UN Economic Commission for Africa (ECA), the other countries with their projected growth in brackets include Kenya (1.0 percent), Ethiopia (1.9 percent) and South Sudan (4.1 percent).

The director of the ECA Eastern Africa Mama Keita, who presented the macroeconomic and social overview for the region during the 24th session of the Intergovernmental Committee of Senior Officials and Experts, started yesterday that the growth was prompted by good management of prices, stimulus packages as well as support to small businesses.

“This is really a positive surprise,” she said in a virtual meeting attended by experts and government representatives from different countries.

 

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Air Tanzania's Boeing 787-8 will finally get into its stride as it goes beyond the region. Photo: The Citizen


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East African Community (EAC) is the only regional economic grouping which is projected to grow by one percent while the rest of the groups like Ecowas, IGAD and SADC are expected to be in recession.

“The Eastern Africa has a lower cases of Covid-19 compared to the rest of Africa. However, this crisis has exposed critical gaps in the regional health system,” she added.

The region also experienced flooding and swarms of desert locusts which she said aggravated the challenges of Covid-19 in the region.

ECA lowered Tanzania economic growth projections to 1.9 percent while Africa is expected to be in the negative.

However, the government of Tanzania estimates the economy will grow by 5.7 percent this year, down from 6.9 percent projected before the outbreak of Covid-19.

While many other countries introduced measures such as curfew, Tanzania opted for a relaxed approach which allowed the economic activities to move on during the pandemic.


The sectors of the economy which are hard hit by the pandemic include the tourism which the EAC secretariat estimates to drop by between 40 and 60 percent of the activities this year.

“We need to deepen collaboration in the region,” said the EAC secretary general Liberat Mfumukeko who also shared the regional experience on the Covid-19 response.

He said the EAC had come up with recovery plan informed by insights and efforts taking place around the world.

Kenya said they had formed a national health response team which addressed different aspects including the business sector.

“We worked closely with the private sector. Some of the measures included the exportation of cargo from the agriculture sector using our own passenger plane,” said Ms Patricia Aruwa from Kenya ministry of trade who intervened to share the experience during the online session.

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Dar es Salaam bus rapid transit (UDA-RT).

While the region has generally been adversely affected by the pandemic, the impact is more severe for countries dependent on tourism.

The Covid-19 pandemic has amplified debt vulnerabilities in the region.

Before the crisis, there were five countries (Burundi, Eritrea, Ethiopia, Kenya and Seychelles) with debt-to-GDP ratios exceeding 50 percent in 2019, according to the ECA. However, the pandemic has increased the proportion of countries in the region with debt-to-GDP ratios exceeding 50 percent – a move that has increased debt servicing payments.

An increase in risk aversion in financial markets has also raised borrowing costs for African countries while public revenues have decreased against a background of sustained public spending to offset the effects of Covid-19.