Zanzibar's economy in May 2026, at a glance
Zanzibar's headline inflation rose to 5.5 percent in May 2026, from 4.2 percent a year earlier, as food prices (up 9.9% y/y) and fuel-linked transport costs (up 5.1% y/y) outweighed easing pressure elsewhere in the basket. On the fiscal side, the government collected TZS 133.3 billion against a monthly target of TZS 216.0 billion (61.7% achievement), while a TZS 309 billion expenditure programme — nearly 60 percent of it development spending — produced a TZS 175.7 billion deficit financed domestically. The external sector was the standout performer: Zanzibar's current account surplus grew 21.2 percent to USD 864.8 million in the year ending May 2026, powered by a 21 percent jump in tourist arrivals and an extraordinary clove-export boom that lifted goods exports more than twofold.
What's Next for Tanzania's Economy? The Policy Gaps Keeping USD 1 Trillion Out of Reach by 2050
Zanzibar's tourism-and-agriculture-led growth model is a useful case study within TICGL's broader 2050 growth-gap analysis — see what it will take to scale this success nationally.
Inflation: food and transport push prices higher
Zanzibar's headline inflation climbed to 5.5 percent in May 2026, up from 5.0 percent in April and 4.2 percent a year earlier — moving further from the very low readings seen in mid-2025. Food inflation eased slightly from April's 10.1 percent but, at 9.9 percent, remains the dominant driver, while non-food inflation has been trending up as fuel costs pass through into transport (5.1%) and restaurant & accommodation prices (7.4%).
Headline, food & non-food inflation
Percent, year-on-year — the three most recent readings
Inflation by CPI group — May 2026
Annual % change, all 13 basket groups
| Group (weight %) | May-25 | Apr-26 | May-26 |
|---|---|---|---|
| Food & non-alcoholic beverages (41.9) | 4.5 | 9.9 | 9.7 |
| Housing, water, electricity, gas (25.8) | 4.7 | -0.4 | 1.2 |
| Transport (9.1) | 2.2 | 2.7 | 5.1 |
| Furnishings & household maintenance (4.8) | 4.0 | 2.2 | 2.4 |
| Information & communication (4.2) | 2.2 | 0.0 | 0.1 |
| Clothing & footwear (6.3) | 5.1 | 1.5 | 1.6 |
| Restaurants & accommodation (1.4) | 0.6 | 6.8 | 7.4 |
| Alcoholic beverages & tobacco (0.2) | -0.2 | 4.4 | 4.3 |
| Personal care & social protection (1.7) | 4.9 | 1.9 | 0.8 |
| Education (1.6) | 3.8 | 1.5 | 0.3 |
| Recreation, sport & culture (1.1) | 4.6 | 2.6 | 2.6 |
| Health (1.3) | 1.5 | 0.6 | 0.6 |
| Insurance & financial services (0.5) | 0.0 | 0.0 | 0.0 |
| Headline (100.0) | 4.2 | 5.0 | 5.5 |
| Food (40.5) | 3.9 | 10.1 | 9.9 |
| Non-food (59.5) | 4.4 | 1.1 | 2.1 |
Source: Office of the Chief Government Statistician, Zanzibar (Table 3.1.1). Base: July 2022 = 100.
Government budgetary operations: revenue lags target, deficit widens
Zanzibar's government resource envelope reached TZS 133.3 billion in May 2026 — just 61.7 percent of the monthly target — with domestic revenue of TZS 129.5 billion (69.9% of target) and TZS 3.8 billion in grants. Tax revenue supplied 90.5 percent of domestic revenue, while non-tax collections of TZS 12.4 billion reached only 63 percent of target. Total expenditure of TZS 309 billion — 59.6 percent of it development spending — outpaced resources, producing an overall deficit of TZS 175.7 billion financed through domestic borrowing.
Government resources — May 2026
TZS billion, by revenue source
Government expenditure — May 2026
TZS billion, by spending category
| Source | 2025 Actual | 2026 Estimate | 2026 Actual | % of target |
|---|---|---|---|---|
| Tax on imports | 26.3 | 30.8 | 22.7 | 73.7% |
| VAT & excise duties (local) | 39.7 | 64.6 | 46.6 | 72.1% |
| Income tax | 21.0 | 32.7 | 33.1 | 101.2% |
| Other taxes | 19.2 | 37.4 | 14.7 | 39.3% |
| Non-tax revenue | 10.2 | 19.6 | 12.4 | 63.3% |
| Grants | 2.5 | — | 3.8 | — |
| Total resource envelope | — | 216.0 | 133.3 | 61.7% |
Source: Ministry of Finance and Planning, Zanzibar (Chart 3.2.1, Chart 3.2.2). Other taxes include hotel and restaurant levies, tour operator levy, revenue stamps, airport/seaport service charges, road development fund and petroleum levy.
External sector: a widening surplus built on tourism and trade
Zanzibar's current account surplus grew 21.2 percent to USD 864.8 million in the year ending May 2026, from USD 713.6 million a year earlier. Services exports — dominated by tourism — accounted for 96 percent of total goods-and-services exports, while a clove-export boom pushed goods exports up sharply despite the isles' persistently negative goods-trade balance.
Current account, year ending May
USD million, 2025 vs 2026p
Imports of goods by category
USD million, year ending May — capital imports more than doubled
| Item | 2025 | 2026p | % change |
|---|---|---|---|
| Exports of goods | 33.4 | 67.2 | +101.2% |
| Imports of goods (fob) | 532.7 | 660.1 | +23.9% |
| Goods account balance | -499.3 | -592.9 | +18.7% |
| Services receipts | 1,299.4 | 1,572.5 | +21.0% |
| Services account balance | 1,198.7 | 1,447.5 | +20.8% |
| Goods & services balance | 699.3 | 854.6 | +22.2% |
| Primary income balance | 12.7 | 8.8 | -31.2% |
| Secondary income balance | 1.5 | 1.5 | -3.2% |
| Current account balance | 713.6 | 864.8 | +21.2% |
Source: Tanzania Revenue Authority, banks and Bank of Tanzania computations (Table 3.3.1). p = provisional data.
The clove-export boom driving goods exports
Clove export value jumped from just USD 3.3 million in the year ending May 2025 to an estimated USD 41.5 million in the year ending May 2026 — more than twelvefold — as both volumes (up roughly ninefold, to 6.4 thousand tonnes) and unit prices (up 36.2%, to USD 6,515.5 per tonne) rose sharply. Cloves alone now account for 61.7 percent of Zanzibar's total goods exports, overtaking manufactured goods and seaweed as the isles' leading export earner.
Goods exports by category
USD '000, year ending May — 2025 vs 2026p
Clove exports: value, volume & price
Indexed view — year ending May 2025 = 100
| Category | 2025 | 2026p | % change |
|---|---|---|---|
| Cloves (traditional) | 3,314.5 | 41,508.4 | +1,152% |
| Manufactured goods | 15,200.6 | 10,886.2 | -28.4% |
| Other non-traditional exports | 10,043.8 | 12,463.1 | +24.1% |
| Seaweeds | 3,438.5 | 1,632.2 | -52.5% |
| Fish & fish products | 1,386.5 | 752.7 | -45.7% |
| Total goods exports | 33,383.9 | 67,242.7 | +101.4% |
Source: Tanzania Revenue Authority and Bank of Tanzania computations (Table 3.3.2). p = provisional data.
What this means for investors and policymakers
1. Tourism remains the anchor
With services making up 96% of Zanzibar's exports and tourist arrivals up 21% y/y, hospitality, transport and ancillary services remain the highest-conviction growth sectors for investors on the isles.
2. Clove windfall needs a strategy
A twelvefold jump in clove export value is a rare opportunity to build price-stabilisation and value-addition capacity (processing, branding) before the current price cycle normalises.
3. Revenue collection needs strengthening
At 61.7% of target, Zanzibar's resource envelope shortfall — especially in import-linked taxes and "other taxes" — points to room for improved compliance and administration to reduce reliance on domestic borrowing.
Related TICGL insights & tools
Continue exploring Tanzania's economy — mainland and Zanzibar — with TICGL's research library, live dashboards and researcher programme.
Tanzania Economic Review — June 2026 (Full Analysis)
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Read more → Featured StudyWhat's Next for Tanzania's Economy? Policy Gaps to 2050
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Read more → Live ToolTanzania Business Intelligence Dashboard
Open dashboard → AdvisoryInvest in Tanzania — TICGL Investment Advisory
Explore → OpportunityJoin TICGL as a Researcher
Apply now →Uchumi wa Zanzibar — Mei 2026
Kiwango cha mfumko wa bei Zanzibar kiliongezeka hadi asilimia 5.5 mwezi Mei 2026, kutoka asilimia 4.2 mwaka mmoja uliopita, kikichangiwa zaidi na kupanda kwa bei za vyakula (asilimia 9.9) na gharama za usafirishaji (asilimia 5.1) kufuatia mtikisiko wa bei za mafuta duniani.
Kwa upande wa bajeti, Serikali ya Mapinduzi Zanzibar ilikusanya rasilimali za jumla ya shilingi bilioni 133.3 mwezi Mei 2026, sawa na asilimia 61.7 tu ya lengo la mwezi huo. Matumizi ya Serikali yalifikia shilingi bilioni 309, ambapo asilimia 59.6 ilielekezwa kwenye miradi ya maendeleo, hali iliyosababisha nakisi ya shilingi bilioni 175.7 iliyogharamiwa kwa mikopo ya ndani.
Upande wa biashara ya nje ndio uliofanya vizuri zaidi — ziada ya urari wa biashara wa nje (current account) iliongezeka kwa asilimia 21.2 hadi dola za Marekani milioni 864.8 kwa mwaka unaoishia Mei 2026, ikichagizwa na ongezeko la watalii kwa asilimia 21 (kufikia watalii 947,169) na ongezeko kubwa la mauzo ya karafuu nje — kutoka dola milioni 3.3 hadi dola milioni 41.5, sawa na ongezeko la zaidi ya mara kumi na mbili.
Maana yake: Utalii unaendelea kuwa nguzo kuu ya uchumi wa Zanzibar, na ongezeko la mauzo ya karafuu ni fursa kubwa ya kuongeza thamani ya mazao hayo. Hata hivyo, TICGL/TERI inashauri Serikali kuimarisha ukusanyaji wa mapato ya ndani ili kupunguza utegemezi wa mikopo katika kugharamia bajeti.