African markets

Tanzanian economy grows 5.4%

Despite the fallout from war in Ukraine and the lingering impact of Covid-19, Tanzania’s economy grew by an impressive 5.4% in the first quarter of 2022.

This puts the country on track to meet its growth target of 4.7% for 2022.

Initially, the government set itself the goal of increasing economic output by 5.5%.

However, with the war in Ukraine, which has seen the prices of fuel, cooking oil, wheat and fertilizers, among other essentials, increase due to disruptions in supply chains after the United States and their allies imposed sanctions on Russia, Tanzania revised its GDP growth targets.

Finance and Planning Minister Mwigulu Nchemba told parliament in June that the country had revised its real GDP growth rate for 2022 to 4.7%.

But the latest data from the National Bureau of Statistics (NBS) shows that Tanzania’s quarterly GDP was 34.9 trillion shillings between January and March, an increase from 33.1 trillion shillings recorded during a similar period last year.

The data – measured by economic trends at current and constant prices – shows that Tanzania actually performed well during the first quarter of 2022, as during a similar period in 2021 the economy grew by 5%.

Agriculture contributed 19.6% to GDP in the first quarter, according to NBS figures. Construction, manufacturing, and mining and quarrying came in second, third, and fourth place with contributions of 14.1%, 9%, and 7.1%, respectively.

Trade and repair contributed 6.7%, while finance and insurance activities injected 6.4% into the economy.

Economist Humphrey Moshi said the positive momentum in major economic activities, coupled with the government’s willingness to promote investment, guarantees the achievement of the growth target of 4.7% and even higher.

He said, however, that the country should place more emphasis on capacity building and improve local production to meet supply shortages, such as in the case of commodities like wheat and cooking oil.

“It is time to build self-reliance by increasing agricultural yields by promoting irrigation and subsidizing farmers and others to reduce over-reliance on European imports and protect our economy from any risk associated with disruptions in supply chains,” Professor Moshi said. .

He also noted that the country can also use its regional integration and strengthen bilateral relations in Africa to find cheaper alternative sources of supply compared to Europe.

The economic recovery in 2022 has also been helped by the return of foreign investment and tourism activities, according to a prominent economist and consultant, Professor Samuel Wangwe.

Between January and May this year, the number of visitors increased by 44% to 458,048 compared to 317,270 last year.

“We have seen positive signs since the start of the year, there is an active investment campaign with huge support from the government, regardless of the challenges such as rising fuel prices and inflation, the Tanzania is on track to meet its 2022 target,” Professor Wangwe said.

The positive economic sentiments were also echoed by the Monetary Policy Committee (MPC) which said after its 221st meeting on August 5, 2022 that the country’s economic growth trend was in line with plans and expectations as the government aims an annual growth rate of 4.7% this year. .

“The performance of the national economy in the first and second quarters was broadly in line with the 2022 growth projection of 4.7% and 5.4% for Mainland Tanzania and Zanzibar, respectively,” MPC said in its statement.