Tanzania’s external sector showcased remarkable strength in November 2024, with the current account deficit narrowing by 35% to USD 2,025.8 million. Exports surged by 14.2% to USD 15,872.9 million, driven by gold and tourism, while imports grew modestly by 2.7%. Foreign exchange reserves increased to USD 5,056.8 million, covering 4.1 months of imports, exceeding benchmarks. This performance highlights Tanzania’s growing global competitiveness and economic resilience, ensuring a stable foundation for sustainable growth.

The external sector demonstrated notable improvements in November 2024, driven by robust export growth, a reduced current account deficit, and strong foreign exchange reserves. These factors underline the resilience and recovery of Tanzania's economy.

1. Current Account Balance

• The current account deficit narrowed significantly by 35% to USD 2,025.8 million in the year ending November 2024, compared to USD 3,115.8 million in the corresponding period in 2023.
• This improvement was attributed to strong export performance and controlled import growth.

2. Exports

• Total Exports: Increased by 14.2% to USD 15,872.9 million in the year ending November 2024, up from USD 13,901.2 million in the same period in 2023.
• Goods Exports:
  • Rose to USD 8,887.1 million, compared to USD 7,771.7 million in 2023.
  • Mineral exports dominated, with gold alone contributing USD 3,320.9 million, accounting for 83.1% of mineral exports and 37.4% of total goods exports.
• Services Exports:
  • Increased to USD 6,985.9 million, up by 14% year-on-year, driven by growth in tourism receipts and transportation earnings.
  • Tourism receipts: Grew by 11.1% to USD 3,681.5 million, supported by increased tourist arrivals (2,106,870 tourists, compared to 1,781,214 in 2023).

3. Imports

• Total Imports: Grew modestly by 2.7% to USD 16,582.7 million, compared to USD 16,142.1 million in 2023.
• Goods Imports: Accounted for 85% of the total import bill, driven by industrial supplies and refined petroleum products.
  • Petroleum imports: Declined by 7% to USD 2,578.5 million, primarily due to favorable price effects.

4. Foreign Exchange Reserves

• Reserves rose to USD 5,056.8 million, up from USD 4,850.8 million in November 2023.
• The reserves were sufficient to cover 4.1 months of projected imports, meeting and exceeding the national benchmark of 4 months.

Key Figures in Summary

Implications:

1. Export-Led Recovery:
   • The substantial growth in exports, particularly from gold and tourism, highlights the resilience of Tanzania's external sector and its role in economic recovery.
2. Sustainable Import Growth:
   • Modest growth in imports, with a decline in petroleum imports, reflects effective management of import bills despite global challenges.
3. Strengthened External Resilience:
   • The increase in foreign exchange reserves and a narrowing current account deficit underscore Tanzania's improved ability to weather external shocks and maintain macroeconomic stability.

The external sector's performance in November 2024 illustrates Tanzania's growing strength in exports, particularly in minerals and tourism, coupled with controlled imports and robust reserve levels. This positions the economy well for sustainable growth and resilience against global uncertainties.

Tanzania's external sector performance in November 2024 highlight several important trends and insights about the country's economic standing and resilience

1. Positive Export Performance Drives Recovery

• The 14.2% growth in total exports (to USD 15,872.9 million) signals Tanzania's increasing competitiveness in global markets, especially in key sectors like gold mining and tourism.
• Tourism receipts grew by 11.1%, supported by higher tourist arrivals, emphasizing the sector's role as a major foreign exchange earner.

2. Controlled Import Growth Reflects Stability

• The 2.7% rise in imports demonstrates Tanzania's ability to manage its import bills effectively, ensuring that the trade deficit does not widen excessively.
• The 7% decline in petroleum imports reflects price advantages and efficient consumption, contributing to reduced external pressure.

3. Narrowed Current Account Deficit Signals Economic Improvement

• The 35% reduction in the current account deficit to USD 2,025.8 million shows improved external balances, supported by strong export earnings and controlled import bills.
• This reduction boosts the country's ability to withstand external shocks and enhances investor confidence.

4. Strengthened Foreign Exchange Reserves Indicate Resilience

• Reserves reached USD 5,056.8 million, covering 4.1 months of imports, exceeding the national benchmark. This signals robust external sector health and the ability to manage future trade or financial shocks.

5. Implications for Economic Stability

• Improved External Balances: Growth in exports coupled with a narrowing deficit reflects Tanzania's strengthening position in international trade.
• Reduced Vulnerability: Higher foreign exchange reserves and a slower pace of depreciation indicate greater resilience to global uncertainties.
• Sectoral Contribution: Gold and tourism emerge as pivotal drivers of the economy, underscoring the importance of further developing these sectors.

Key Takeaways

1. Economic Resilience: The narrowing current account deficit and growing reserves underline Tanzania's improving external stability.
2. Export Diversification Potential: While gold and tourism dominate, there is potential to expand other export sectors for sustained growth.
3. Global Competitiveness: The performance of key exports reflects Tanzania's ability to leverage favorable global conditions and enhance its economic footprint.

Conclusion

The external sector performance in November 2024 tells a story of recovery, resilience, and growth. Tanzania is strengthening its global economic position through robust exports, effective import management, and growing foreign exchange reserves, laying a strong foundation for sustainable economic progress.