Tanzania's economy is projected to grow at a solid rate of 5-6% in 2024, outpacing Sub-Saharan Africa’s average growth of 3.5%. Key drivers of this growth include agriculture (28% of GDP), mining, and a recovering tourism sector. While global inflation, energy prices (with oil at $84 per barrel), and fiscal pressures pose risks, Tanzania’s inflation is expected to remain moderate compared to regional peers. Public debt remains sustainable, supported by large infrastructure projects like the Standard Gauge Railway. However, climate risks and global trade disruptions could impact future growth if not managed carefully.

1. Regional Context: Sub-Saharan Africa (SSA)

• Sub-Saharan Africa’s growth is projected to reach 3.5% in 2024, slightly up from 3.0% in 2023. The region is expected to experience continued growth, hitting 4.0% by 2026​.
• Tanzania, as part of this region, shares similar growth dynamics, heavily influenced by commodity prices, fiscal policies, and global trends like inflation and interest rates.

2. Tanzania’s Growth Outlook

• The World Bank forecast that Tanzania will maintain solid economic growth, particularly in sectors like agriculture, mining, and tourism.
• Growth in Tanzania is typically higher than the regional average. It has been projected to grow at around 5-6% annually, reflecting its diversified economy. Key growth drivers include:
  • Agriculture: Contributing about 28% of GDP, agriculture remains a vital part of Tanzania’s economy. Global trends in agricultural prices, projected to stabilize, could benefit Tanzania’s export revenues.
  • Mining: Tanzania is a significant exporter of gold, and global gold prices are expected to remain stable or grow slightly, which will support the mining sector.
  • Tourism: After a sharp decline during the pandemic, Tanzania’s tourism industry is recovering, contributing to higher GDP growth projections​.

3. Inflation and Fiscal Pressures in Tanzania

• Like many countries in Sub-Saharan Africa, Tanzania is expected to face moderate inflation pressures, influenced by global commodity prices, especially in food and energy. The region's inflation is expected to be higher than the global average but will stabilize in 2024.
• Tanzania’s inflation has been relatively moderate compared to some of its regional peers, thanks to government interventions and policies aimed at maintaining price stability. However, risks remain from:
  • Global energy prices: The report projects oil prices to average $84 per barrel in 2024, which could affect fuel import costs and inflation.
  • Food inflation: Tanzania’s agricultural sector could benefit from stable grain prices, helping to moderate food price inflation​.

4. Public Debt and Investment

• Tanzania’s public debt remains sustainable, but global financing conditions, including rising interest rates, pose risks. Tanzania, like other EMDEs, could face higher borrowing costs if global interest rates remain high, as expected (around 4% through 2026).
• The report emphasizes the importance of public investment in driving growth in emerging markets, and Tanzania's focus on infrastructure projects, such as the Standard Gauge Railway (SGR) and energy projects, will be crucial for sustained growth​.

5. Risks to Tanzania’s Economic Growth

• Geopolitical risks and global trade disruptions could impact Tanzania’s export sectors, especially in minerals and agricultural products.
• Climate-related risks are significant for Tanzania, where agriculture relies heavily on favorable weather conditions. Extreme weather events could disrupt food production, affecting both inflation and growth​.
• Debt distress risks in Sub-Saharan Africa remain elevated, with about 40% of EMDEs at risk. Although Tanzania is not currently in debt distress, careful fiscal management is essential to maintain sustainability​.

6. Tanzania’s Policy Responses

• To mitigate risks, Tanzania will need to focus on:
  • Strengthening public investment efficiency to ensure that infrastructure projects deliver high returns.
  • Diversifying its export base to reduce vulnerability to global commodity price swings.
  • Implementing fiscal policies that support growth while maintaining debt sustainability.

Key Figures for Tanzania (based on SSA and global trends):

• Growth: Projected at 5-6% in 2024, higher than the SSA average of 3.5%​(GEP-June-2024).
• Inflation: Expected to remain moderate but subject to global food and energy price fluctuations.
• Oil prices: $84 per barrel in 2024 could increase import costs for Tanzania, affecting inflation.
• Public investment: Tanzania’s large infrastructure projects are key to sustaining growth but require efficient management and fiscal responsibility.

Summary:

• Tanzania’s economy is expected to continue growing at a solid rate, outperforming the regional average. Growth drivers include agriculture, mining, and tourism.
• Risks from global inflation, commodity prices, and debt sustainability are present, but with sound policies, Tanzania can navigate these challenges.

Source: Global Economic Prospects June 2024 report

Global growth faces multiple risks, including geopolitical tensions, which may disrupt trade and raise energy prices beyond $84 per barrel in 2024. Trade fragmentation could slow expected trade growth to below 2.5%, while persistent inflation, projected at 3.5% in 2024, might force central banks to maintain high interest rates of around 4% through 2026, dampening investment. Additionally, 40% of EMDEs are at risk of debt distress, with tightening global financing further constraining growth. Climate-related disasters and slower growth in key economies, like China, also pose significant threats to recovery. Conversely, faster disinflation and stronger U.S. growth offer potential upside.

1. Geopolitical Tensions

• Geopolitical risks remain a significant factor that could destabilize global growth. Escalating tensions, especially in areas like the Middle East and Eastern Europe, could lead to increased volatility in commodity prices, particularly energy.
  • Disruptions in the supply of oil could push prices higher than the projected $84 per barrel in 2024, dampening global economic activity​.
  • Geopolitical conflicts can disrupt global trade networks and heighten uncertainty, which has already reached historically high levels in recent years due to trade restrictions and sanctions​.

2. Trade Fragmentation

• Trade fragmentation and rising protectionism continue to threaten global trade. Trade policy uncertainty in major economies has reached its highest level since 2000, partly due to elections and new trade measures aimed at restraining cross-border flows​.
  • Trade growth is expected to recover moderately to 2.5% in 2024, but further trade barriers could reduce this significantly​.
  • A breakdown in global supply chains, especially in critical sectors such as semiconductors and energy, could cause delays and price increases that slow down production and economic recovery.

3. Inflationary Pressures

• Persistent inflationary pressures, especially in core areas like services, pose a risk to growth, as central banks may need to maintain tight monetary policies for longer.
  • Global inflation is forecast at 3.5% in 2024, but if inflationary trends continue to be more stubborn than anticipated, central banks might delay easing interest rates​.
  • Higher-than-expected inflation could lead to continued high global interest rates (expected to remain around 4% through 2026, double the previous two decades' average), dampening investment and consumer spending​.

4. Higher-for-Longer Interest Rates

• The risk of higher-for-longer interest rates could further slow down global activity. Monetary policy rates in advanced economies, especially in the United States and Europe, are expected to stay elevated as long as inflationary pressures persist.
  • This is particularly problematic for emerging market and developing economies (EMDEs), as it increases borrowing costs and leads to capital outflows. EMDE borrowing costs remain high, with about 40% of EMDEs vulnerable to debt-related stress​.
  • If interest rates remain high, global growth could deviate downward by 0.3-0.5 percentage points over the next two years, and investments could suffer​.

5. Debt Vulnerability and Fiscal Stress

• Many countries, particularly low-income countries (LICs) and EMDEs, are facing elevated levels of debt distress. The report highlights that around 40% of EMDEs are at high risk of debt-related stress​.
  • As global financing conditions tighten, servicing this debt will become more difficult, constraining governments’ ability to invest in growth-stimulating projects.
  • Public investment could be significantly reduced as countries try to balance fiscal sustainability with their debt obligations​.

6. Climate-Related Natural Disasters

• Increasing frequency of climate-related natural disasters could severely impact growth, especially in vulnerable regions like Sub-Saharan Africa and small island developing states.
  • These disasters can disrupt agriculture, infrastructure, and production chains, leading to output losses and exacerbating food insecurity.
  • Food prices could spike if global agricultural supply chains are hit by extreme weather events, with potentially significant implications for inflation in vulnerable economies​.
  • The report emphasizes that climate-related risks can stall or even reverse the progress made in disinflation efforts​.

7. Slower Growth in Key Economies

• Weaker-than-anticipated growth in key economies, such as China, poses a significant downside risk to global growth.
  • China’s growth is expected to slow to 4.8% in 2024, and any deeper or more prolonged downturn in China’s property market or overall economy could negatively impact commodity-exporting countries that depend on Chinese demand​.
  • A more severe slowdown in advanced economies, such as the Eurozone (projected to grow at only 0.7% in 2024), could drag down global trade and investment​.

8. Upside Risk: Faster Disinflation and Stronger Growth in the U.S.

• On the upside, faster-than-expected disinflation could occur if global supply chains recover more quickly, or if there is more progress in technological adoption that improves productivity.
  • In such a scenario, central banks could ease monetary policy faster, leading to a stronger growth outlook, particularly in advanced economies​.
  • U.S. growth could outperform expectations if labor force participation continues to rise and investment in technology-driven sectors remains strong​.

Key Figures:

• Global inflation: Forecast at 3.5% in 2024, but inflation risks remain high due to ongoing supply chain disruptions and persistent service sector inflation​.
• Interest rates: Expected to average 4% through 2026, but could stay higher if inflation remains stubborn​.
• 40% of EMDEs are vulnerable to debt-related stress, which could slow down growth if financial conditions tighten​
• Trade growth: Projected at 2.5% in 2024, but fragmentation and geopolitical tensions could reduce this further​.

Summary of Risks to Global Growth:

• Geopolitical tensions and trade fragmentation are critical risks that could disrupt global supply chains and trade flows.
• Inflation remains a major concern, with the possibility of persistent inflation forcing central banks to maintain high interest rates, which could dampen investment and growth.
• Debt vulnerability in EMDEs and climate-related disasters pose significant challenges, while slower-than-expected growth in key economies like China could impact global demand for commodities.
• On the upside, faster disinflation and stronger growth in the U.S. could help mitigate some of the risks, improving the global growth outlook.

Source: Global Economic Prospects June 2024 report

Ukuaji wa uchumi wa Tanzania unatarajiwa kufikia 5-6% mwaka 2024, juu zaidi ya wastani wa kanda ya Afrika Kusini mwa Jangwa la Sahara (SSA) wa 3.5%. Sekta muhimu zinazochangia ukuaji ni kilimo (28% ya Pato la Taifa), madini, na utalii. Hata hivyo, Tanzania inakabiliwa na changamoto za mfumuko wa bei, haswa kutokana na mabadiliko ya bei za chakula na nishati duniani. Miradi ya miundombinu, kama vile Reli ya Kiwango cha Kimataifa (SGR), ni muhimu kwa ukuaji wa muda mrefu, lakini usimamizi mzuri wa fedha unahitajika kuhakikisha uendelevu wa deni.

1. Muktadha wa Kanda: Afrika-Kusini mwa Jangwa la Sahara (SSA)

• Ukuaji wa Afrika-Kusini mwa Jangwa la Sahara unakadiriwa kufikia 3.5% mwaka 2024, ikiwa juu kidogo kutoka 3.0% mwaka 2023. Kanda hii inatarajiwa kuendelea kukua, ikifikia 4.0% mwaka 2026​.
• Tanzania, kama sehemu ya kanda hii, inashiriki mienendo sawa ya ukuaji, ikichangiwa zaidi na bei za bidhaa, sera za kifedha, na mitindo ya kimataifa kama vile mfumuko wa bei na viwango vya riba.

2. Mtazamo wa Ukuaji wa Tanzania

• Benki ya Dunia na taasisi zingine zinatabiri kuwa Tanzania itaendelea kudumisha ukuaji wa uchumi thabiti, hasa katika sekta kama kilimo, madini, na utalii.
• Ukuaji wa Tanzania kwa kawaida ni wa juu zaidi kuliko wastani wa kikanda. Inakadiriwa kukua kwa wastani wa 5-6% kwa mwaka, ikionyesha uchumi wake wenye mchanganyiko. Vichocheo muhimu vya ukuaji ni:
  • Kilimo: Kikichangia takriban 28% ya Pato la Taifa, kilimo kinaendelea kuwa sehemu muhimu ya uchumi wa Tanzania. Mitindo ya kimataifa katika bei za mazao ya kilimo, ambazo zinatarajiwa kuwa thabiti, zinaweza kunufaisha mapato ya nje ya Tanzania.
  • Madini: Tanzania ni muuzaji mkubwa wa dhahabu, na bei za kimataifa za dhahabu zinatarajiwa kubaki thabiti au kuongezeka kidogo, ambayo itasaidia sekta ya madini.
  • Utalii: Baada ya kushuka kwa kasi wakati wa janga la COVID-19, sekta ya utalii ya Tanzania inarejea, na hivyo kuchangia makadirio ya juu ya ukuaji wa Pato la Taifa​.

3. Mfumuko wa Bei na Shinikizo la Kifedha Tanzania

• Kama ilivyo kwa nchi nyingi za Afrika-Kusini mwa Jangwa la Sahara, Tanzania inatarajiwa kukabiliwa na shinikizo la wastani la mfumuko wa bei, likiathiriwa na bei za kimataifa za bidhaa, hasa chakula na nishati. Mfumuko wa bei wa kanda unatarajiwa kuwa juu kuliko wastani wa dunia lakini utadhibitiwa mwaka 2024.
• Mfumuko wa bei Tanzania umekuwa wa wastani ukilinganishwa na majirani zake wa kikanda, kutokana na hatua za serikali za kudhibiti bei. Hata hivyo, hatari zinaweza kutokana na:
  • Bei za kimataifa za nishati: Ripoti inatabiri bei za mafuta kuwa wastani wa dola 84 kwa pipa mwaka 2024, ambayo inaweza kuongeza gharama za uagizaji wa mafuta na kusababisha mfumuko wa bei.
  • Mfumuko wa bei wa chakula: Sekta ya kilimo ya Tanzania inaweza kufaidika na bei thabiti za nafaka, jambo ambalo litaleta unafuu katika mfumuko wa bei ya chakula​.

4. Deni la Umma na Uwekezaji

• Deni la umma la Tanzania linaendelea kuwa endelevu, lakini hali za kifedha duniani, ikiwa ni pamoja na kuongezeka kwa viwango vya riba, ni hatari. Tanzania, kama ilivyo kwa nchi nyingine zinazoendelea (EMDEs), inaweza kukabiliwa na gharama kubwa za kukopa ikiwa viwango vya riba duniani vitabaki juu (takriban 4% hadi mwaka 2026).
• Ripoti inasisitiza umuhimu wa uwekezaji wa umma katika kuchochea ukuaji wa masoko yanayoibuka, na miradi ya miundombinu ya Tanzania, kama vile Reli ya Kiwango cha Kimataifa (SGR) na miradi ya nishati, itakuwa muhimu kwa ukuaji endelevu​.

5. Hatari kwa Ukuaji wa Uchumi wa Tanzania

• Hatari za kijiografia na usumbufu wa biashara duniani unaweza kuathiri sekta za usafirishaji bidhaa za Tanzania, hasa katika madini na mazao ya kilimo.
• Hatari zinazohusiana na hali ya hewa ni kubwa kwa Tanzania, ambapo kilimo kinategemea hali nzuri ya hewa. Matukio mabaya ya hali ya hewa yanaweza kuvuruga uzalishaji wa chakula, na hivyo kuathiri mfumuko wa bei na ukuaji​.
• Hatari ya madeni katika Afrika Kusini mwa Jangwa la Sahara inaendelea kuwa kubwa, na karibu 40% ya nchi za EMDEs zikiwa katika hatari ya deni. Ingawa Tanzania haiko katika hali ya msongo wa deni kwa sasa, usimamizi mzuri wa fedha za umma ni muhimu ili kudumisha uendelevu​.

6. Mwitikio wa Sera za Tanzania

• Ili kupunguza hatari hizi, Tanzania itahitaji kuzingatia:
  • Kuimarisha ufanisi wa uwekezaji wa umma ili kuhakikisha kuwa miradi ya miundombinu inaleta tija kubwa.
  • Kutafuta mbinu za kupanua wigo wa biashara zake za nje ili kupunguza utegemezi wa mabadiliko ya bei za bidhaa kimataifa.
  • Kutekeleza sera za kifedha zinazounga mkono ukuaji huku zikidumisha uendelevu wa deni.

Takwimu Muhimu za Tanzania (kutokana na mitindo ya SSA na kimataifa):

• Ukuaji wa Pato la Taifa: Unakadiriwa kuwa 5-6% mwaka 2024, juu kuliko wastani wa SSA wa 3.5%​.
• Mfumuko wa bei: Unatarajiwa kubaki wa wastani lakini unaweza kuathiriwa na mabadiliko ya bei za chakula na nishati duniani.
• Bei za mafuta: Dola 84 kwa pipa mwaka 2024 zinaweza kuongeza gharama za uagizaji wa mafuta Tanzania, na hivyo kuathiri mfumuko wa bei.
• Uwekezaji wa umma: Miradi mikubwa ya miundombinu ya Tanzania ni muhimu kwa ukuaji endelevu lakini inahitaji usimamizi mzuri wa fedha na uwajibikaji wa matumizi.

Muhtasari:

• Uchumi wa Tanzania unatarajiwa kuendelea kukua kwa kasi nzuri, ukiwa juu ya wastani wa kikanda. Vichocheo vya ukuaji ni pamoja na kilimo, madini, na utalii.
• Hatari za mfumuko wa bei duniani, bei za bidhaa, na uendelevu wa deni zinaweza kuwa changamoto, lakini kwa sera nzuri, Tanzania inaweza kuzivuka changamoto hizi.

Source: Global Economic Prospects June 2024 report

Global growth is projected to stabilize at 2.6% in 2024, rising to 2.7% by 2025-2026, which is slower than the pre-COVID average of 3.1%. Emerging Market and Developing Economies (EMDEs) are forecasted to grow at 4.0% in 2024, with Sub-Saharan Africa growing at 3.5%. Global inflation is expected to moderate to 3.5%, though it will remain above pre-pandemic levels, especially in EMDEs. Oil prices are set to average $84 per barrel in 2024, while non-energy commodity prices remain stable. Risks to growth include geopolitical tensions and high debt distress in 40% of EMDEs.

1. Global Growth:
   • Global GDP growth is projected to stabilize at 2.6% in 2024, with an expected increase to 2.7% in 2025-2026. This growth is slower than the 3.1% average in the decade before COVID-19​.
   • By 2026, 80% of the world’s population will experience slower growth compared to pre-pandemic levels.
2. Regional Growth:
   • Emerging Market and Developing Economies (EMDEs) are forecast to grow at 4.0% in 2024, down from 4.2% in 2023. China’s growth is expected to slow to 4.8% in 2024.
   • Sub-Saharan Africa is expected to grow at 3.5% in 2024, with a rise to 4.0% in 2026​.
3. Global Inflation:
   • Inflation is projected to moderate to 3.5% globally in 2024, but it will remain higher than pre-pandemic levels​.
   • Inflation in EMDEs is expected to decline but will remain challenging for many regions due to commodity price fluctuations.
4. Commodity Prices:
   • Oil prices are projected to be slightly higher in 2024, averaging $84 per barrel, but lower than 2023 prices​.
   • Prices for non-energy commodities are expected to remain stable​.
5. Risks to Global Growth:
   • Escalating geopolitical tensions and trade fragmentation pose significant risks to global growth.
   • Debt distress risks remain high for 40% of EMDEs, with many economies vulnerable to shocks​.

Source: Global Economic Prospects June 2024 report

Global growth prospects in 2024 show diverse regional dynamics. South Asia is the fastest-growing region, with projected growth of 6.2%, driven by India’s 6.6% expansion. East Asia and Pacific (EAP) growth is expected at 4.8%, led by China, though slowing due to structural issues. Sub-Saharan Africa (SSA) will see a modest improvement to 3.5%, while Europe and Central Asia (ECA) and the Middle East and North Africa (MENA) regions forecast 3.0% and 2.8% growth, respectively. Latin America and the Caribbean (LAC) will have the slowest growth at 1.8%, constrained by fiscal challenges and weak investment.

1. East Asia and Pacific (EAP)

• Growth in 2024: Projected at 4.8%, slightly down from 5.1% in 2023.
• Key Driver: China accounts for the majority of the region's growth but is slowing to 4.8% in 2024, from 5.2% in 2023, due to property sector weakness and structural slowdowns​.
• Excluding China: The rest of the region, including countries like Indonesia, will grow at around 5.0%, buoyed by strong domestic demand and investment​.

2. Europe and Central Asia (ECA)

• Growth in 2024: Forecast at 3.0%, slightly slower than 3.2% in 2023.
• Russia: The recovery is fragile, with 2.9% growth expected in 2024 after a 3.6% rebound in 2023, influenced by high inflation and sanctions​.
• Türkiye: Growth is forecast at 3.0% in 2024, down from 4.5% in 2023​(GEP-June-2024).
• The region faces challenges such as geopolitical tensions, inflation, and energy dependence​.

3. Latin America and the Caribbean (LAC)

• Growth in 2024: Forecast at 1.8%, down from 2.2% in 2023.
• Key Drivers:
  • Brazil: Projected to grow by 2.0% in 2024, slower than 2.9% in 2023, constrained by high interest rates and fiscal concerns​.
  • Mexico: Expected to grow at 2.3% in 2024, compared to 3.2% in 2023, due to weak investment​.
• Structural challenges and external demand, particularly from China and the U.S., are limiting the region's growth.

4. Middle East and North Africa (MENA)

• Growth in 2024: Forecast at 2.8%, an improvement from 1.5% in 2023.
• Key Drivers:
  • Saudi Arabia: Set to grow at 2.5% in 2024, after a contraction of -0.9% in 2023, driven by oil production adjustments and diversification efforts​.
  • Egypt: Growth is projected at 2.8% in 2024, down from 3.8% in 2023, amid fiscal challenges​.
• The region’s growth is influenced by fluctuating oil prices and geopolitical risks.

5. South Asia

• Growth in 2024: Forecast at 6.2%, making it the fastest-growing region globally.
• Key Driver: India, which is expected to grow at 6.6% in 2024, driven by strong domestic demand, investment, and a robust services sector​.
• Bangladesh is forecast to grow at 5.6% in 2024, with challenges such as inflation affecting growth​.
• South Asia's growth outlook is buoyed by internal demand but faces risks from external pressures such as higher global interest rates and energy prices.

6. Sub-Saharan Africa (SSA)

• Growth in 2024: Projected at 3.5%, an improvement from 3.0% in 2023.
• Key Drivers:
  • Nigeria: Expected to grow by 3.3% in 2024, supported by higher oil production and economic reforms​.
  • South Africa: Growth is projected at 1.2% in 2024, constrained by energy supply issues and weak domestic demand​.
• Commodity exporters are benefiting from stabilizing prices, but fiscal constraints and debt remain significant challenges for many countries in the region.

7. Low-Income Countries (LICs)

• Growth in 2024: Forecast at 5.0%, up from 3.8% in 2023, reflecting recovery in commodity-exporting economies​.
• These countries are still grappling with challenges such as debt stress, conflict, and food insecurity, leading to uneven recovery​.

Summary of Regional Outlooks:

• Fastest Growing Region: South Asia, driven by India with 6.6% growth.
• Slowest Growing Region: Latin America and the Caribbean, at 1.8% in 2024, largely due to fiscal and structural challenges.
• Middle East and North Africa shows recovery with 2.8% growth, while Sub-Saharan Africa improves to 3.5%​.

Source: The Global Economic Prospects June 2024 report

Commodity prices are projected to stabilize after the volatility caused by the COVID-19 pandemic and the war in Ukraine, though they will remain at historically high levels. In 2024, oil prices are forecast to rise to $84 per barrel, up from $82.6 in 2023, but will gradually decline to $78.1 per barrel by 2026. Non-energy commodities, including metals and agricultural products, are expected to see modest declines, with the non-energy index slightly decreasing to 110.1 in 2024. However, risks such as geopolitical tensions, climate change, and trade disruptions could still affect price trends globally.

1. Overview of Commodity Prices

• Commodity prices have stabilized after the sharp fluctuations seen during the COVID-19 pandemic and the war in Ukraine. Prices for both energy and non-energy commodities are expected to remain at historically high levels but will show modest declines over the forecast horizon.
• Aggregate commodity prices are expected to decline in 2024, though fluctuations in specific sectors (like energy and food) will continue to drive inflation and impact global trade​.

2. Energy Prices

• Oil prices are expected to remain elevated due to tight supply-demand balances, geopolitical tensions, and production cuts by major oil-producing countries.
  • In 2024, oil prices (Brent crude) are forecast to average $84 per barrel, slightly higher than the $82.6 per barrel in 2023​.
  • Prices are projected to ease to $79 per barrel by 2025 and $78.1 per barrel in 2026​.
  • Natural gas prices and coal prices are expected to remain lower in 2024 compared to the peaks seen during the energy crises of 2022-2023​.
• Energy index: The index, which tracks overall energy prices, is expected to decline modestly in 2024 by 0.6%, reflecting decreases in coal and natural gas prices​.
  • Energy index: In 2024, the World Bank's energy index is projected to drop to 104.0, down from 106.9 in 2023​.

3. Non-Energy Commodities

• Metals prices are expected to remain stable, with demand pressures balancing out due to increased investment in green technologies (e.g., electric vehicles and renewable energy infrastructure).
  • Prices for metals are forecast to stabilize, driven by the demand for metals-intensive green energy projects, offsetting reduced demand from China’s real estate sector​.
• Agricultural prices are expected to decline modestly due to well-supplied global markets, particularly for food crops like grains and edible oils.
  • Grain prices are projected to decline slightly, supported by improved harvests and less volatile global supply chains​.

4. Food and Agricultural Commodities

• Food prices: Although still elevated, global food prices are expected to stabilize and decline slightly over the forecast horizon. The non-energy commodity index is expected to see a modest decrease of 0.2% in 2024​.
  • Food prices: High food prices driven by supply disruptions in previous years are expected to stabilize in 2024, reflecting better weather conditions and fewer disruptions in global supply chains​.
• Non-energy index: This index, which includes agricultural and metals prices, is projected to decline slightly in 2024 to 110.1, down from 110.2 in 2023, showing little movement overall​.

5. Risks to Commodity Prices

• Geopolitical tensions: Continued geopolitical tensions, particularly in regions rich in energy resources like the Middle East, could drive up oil prices unexpectedly, leading to higher inflation globally.
• Climate-related disruptions: Extreme weather events could impact food production, leading to sudden price spikes for agricultural commodities, especially food crops​.
• Trade fragmentation: Growing protectionism and trade barriers could lead to supply chain disruptions, particularly in energy and agricultural markets, pushing prices higher​.

6. Long-Term Projections

• While oil prices are expected to decline gradually to $78.1 per barrel by 2026, non-energy commodities (particularly metals) will maintain stable demand driven by the ongoing energy transition.
• Agricultural prices will continue to be influenced by climate risks and global demand but are expected to trend downward as global supply stabilizes​.

Key Figures:

• Oil prices:
  • $84 per barrel in 2024, slightly up from $82.6 per barrel in 2023.
  • Gradual decline to $79 per barrel in 2025 and $78.1 per barrel in 2026​(GEP-June-2024).
• Non-energy index:
  • Expected to decrease slightly to 110.1 in 2024 from 110.2 in 2023​(GEP-June-2024).
• Energy index:
  • Forecast to decrease slightly from 106.9 in 2023 to 104.0 in 2024​(GEP-June-2024).

Summary of Commodity Price Outlook:

• Oil prices will remain elevated but are expected to gradually decline after 2024.
• Non-energy commodities like metals and agricultural products are projected to remain relatively stable, with some modest declines due to improved global supply and the energy transition.
• Risks from geopolitical events, climate change, and trade barriers could still cause volatility in key commodity markets.

Source: Global Economic Prospects June 2024 report

Addressed Infrastructure, Regulatory Efficiency, and Public Service Challenges

The Business Ready 2024 report provides an assessment of Tanzania's business environment based on three key pillars: Regulatory Framework, Public Services, and Operational Efficiency

1. Regulatory Framework: Tanzania scored 65.00 points, placing it in the third quintile, meaning its regulatory environment is moderately favorable. This includes regulations that govern business entry, labor, taxation, and financial services, though there is room for improvement in areas like market competition and insolvency.

What it Means: The Regulatory Framework pillar focuses on the laws, rules, and regulations that businesses must follow in Tanzania. A score of 65.00 indicates that while the regulatory environment is moderately favorable, it still has areas that need improvement.

• Strengths: Tanzania has made progress in areas like business entry, taxation, and labor regulations. These areas provide businesses with a stable set of rules for operation.
• Areas for Improvement: The score suggests that Tanzania could enhance regulations governing market competition and business insolvency, where businesses might face difficulties related to anticompetitive behavior or delays in resolving insolvency matters.

What is Measured: This pillar assesses the rules, laws, and regulations that businesses must follow as they enter, operate, and exit the market. It focuses on whether these regulations are clear, fair, and supportive of entrepreneurial activity.

Key Areas Measured:

• Business Entry: The ease with which businesses can register and start operating.
  • Indicator: Time, cost, and complexity involved in starting a business.
• Labor: The flexibility and protections offered by labor laws, including hiring, firing, and worker protections.
  • Indicator: Availability of paid leave, overtime regulations, and worker dismissal processes.
• Financial Services: Regulations governing financial transactions, credit access, and investment opportunities.
  • Indicator: Laws governing credit access, ease of securing loans, and the stability of financial services.
• International Trade: The regulatory environment that affects import/export activities and cross-border transactions.
  • Indicator: Time and costs involved in clearing customs, and regulations around cross-border electronic payments and contracts.
• Taxation: The rules governing business tax obligations.
  • Indicator: Clarity of tax laws, time to file, and availability of tax services.

What It Tells About Tanzania:

• Score: 65.00 points
  • Tanzania performs moderately well here, showing that the country has a decent legal framework to regulate business activities, but there is room for improvement in areas like market competition and business insolvency.
    • Example: While it’s fairly easy to start a business in Tanzania, there may still be inefficiencies in accessing financial services or dealing with labor regulations that slow down business growth.

2. Public Services: Tanzania's score for public services is 51.56 points, placing it in the fourth quintile. This reflects challenges in public service provision that support businesses, including utility services and government institutions related to business regulation.

What it Means: This pillar evaluates the quality of government-provided services that help businesses comply with regulations, such as utility services (electricity, water), online tax services, and other government support structures.

• Challenges: Tanzania’s low score in this area reflects inefficiencies or gaps in public services. For example, businesses may struggle with frequent power outages or delays in obtaining permits, which can slow down operations.
  • Examples: The time to obtain a construction permit could be long, and delays in utility services (like electricity) could further hinder business activities. In some economies, businesses face multiple power outages each month, and this might be contributing to Tanzania's lower score in public services.

What is Measured: This pillar looks at the quality of public services provided by the government that are necessary for businesses to function, including utility services, government transparency, and the infrastructure that supports business compliance with regulations.

Key Areas Measured:

• Utility Services: Access to essential services such as electricity, water, and internet.
  • Indicator: Frequency and duration of power outages, reliability of water services, and internet availability.
• Taxation: Availability and accessibility of online tax services for businesses.
  • Indicator: Whether businesses can file taxes electronically, access support via online tools, and comply with tax obligations efficiently.
• International Trade: Efficiency of customs and border management systems.
  • Indicator: Whether coordinated border management systems are in place and how easily businesses can trade across borders.
• Financial Services: Availability of credit registries and bureaus that collect business-related data.
  • Indicator: How well businesses can access credit and how transparently financial data is managed.

What It Tells About Tanzania:

• Score: 51.56 points
  • Tanzania faces challenges in the quality of its public services, particularly in providing reliable utility services and modernized government support.
    • Example: Frequent power outages or delays in obtaining construction permits could hinder businesses, while limited online tax services might add to compliance costs.
  • Utility Services: Businesses in Tanzania likely deal with infrastructure challenges, such as power reliability, which impacts operational efficiency.

3. Operational Efficiency: Tanzania performed better in operational efficiency with a score of 62.15 points, placing it in the third quintile. This category measures how efficiently businesses can comply with regulations and access public services.

What it Means: The Operational Efficiency pillar measures how easy it is for businesses to comply with regulations and access services. Tanzania’s score in this pillar suggests that businesses face some challenges but generally have moderate success in navigating the regulatory landscape and accessing the services they need.

• Strengths: Tanzania’s operational efficiency score is stronger than its public services score. This suggests that, while services may be lacking, businesses are still able to function reasonably well. Examples of operational challenges might include delays in filing and paying taxes or resolving commercial disputes, which could affect day-to-day business activities.
• Areas for Improvement: The time to settle a commercial dispute in Tanzania could be a challenge. In some economies, resolving disputes can take up to five years, while top-performing economies resolve them in a fraction of the time. Tanzania likely faces inefficiencies in this regard, impacting overall business operations.

What is Measured: This pillar evaluates how easy it is for businesses to comply with the regulatory framework and access public services. It measures the practical implementation of the rules and services described under the first two pillars.

Key Areas Measured:

• Business Entry: Time and effort required to navigate business registration processes.
  • Indicator: The time, number of procedures, and costs involved in registering a business.
• Dispute Resolution: Efficiency of the legal system in resolving commercial disputes.
  • Indicator: Time and cost to resolve business-related disputes in court.
• Labor: How easily businesses can comply with labor regulations, including wage reporting and health and safety compliance.
  • Indicator: Time to process payroll and ensure compliance with labor laws.
• Financial Services: Ease with which businesses can secure loans and financial products.
  • Indicator: Time to secure a loan or access other financial services.
• International Trade: Time and cost to comply with trade regulations, including import/export processes.
  • Indicator: Time and number of documents needed to import/export goods.

What It Tells About Tanzania:

• Score: 62.15 points
  • Tanzania’s operational efficiency score indicates that while businesses face some challenges, they are still able to operate within the regulatory framework.
  • Example: The time required to resolve commercial disputes may be longer than average, but businesses can generally navigate labor laws and financial services without excessive delays. The average number of power outages might also be an issue, but businesses find ways to work around these challenges.

Tanzania's scores in the Business Ready 2024 report provide valuable insights into the country's economic development by highlighting strengths and challenges in its business environment. Here's a breakdown of what these figures reveal about Tanzania's economic development:

1. Regulatory Framework (Score: 65.00)

• Moderately Supportive Regulations: With a score of 65.00, Tanzania has a moderately favorable regulatory environment for businesses. This indicates that the country has established a basic legal framework for business operations, but there are still obstacles that prevent optimal economic performance.
  • Impact on Economic Development: The regulatory framework is crucial for promoting investment and entrepreneurship. Tanzania’s score shows that businesses can operate under fairly stable regulations, but inefficiencies, especially in market competition and insolvency laws, could slow business expansion and investment.
  • Challenges: The legal infrastructure needs to improve to make the economy more competitive and resilient, particularly in handling market disputes and allowing businesses to recover from financial distress. A stronger regulatory environment could lead to increased investor confidence, which is key to fostering long-term economic growth.

2. Public Services (Score: 51.56)

• Weak Infrastructure and Public Services: Tanzania’s score of 51.56 in the Public Services pillar reflects significant challenges, particularly in the quality and reliability of government services and infrastructure like electricity, water, and internet.
  • Impact on Economic Development: Weak public services hinder business productivity. Frequent power outages, delays in obtaining construction permits, and limited access to digital public services all contribute to higher operational costs for businesses, which, in turn, reduces overall economic efficiency and growth.
  • Challenges: Tanzania’s economic development is constrained by the inefficiency of its public services, which affects business sustainability and the ease of doing business. Improving public service delivery, especially infrastructure and digital services, is essential for boosting productivity and attracting both domestic and foreign investment.
  • Potential for Growth: Investments in infrastructure, especially utilities, could unlock greater productivity in sectors like manufacturing and agriculture, leading to job creation and improved economic growth.

3. Operational Efficiency (Score: 62.15)

• Moderate Operational Effectiveness: A score of 62.15 suggests that while businesses in Tanzania can function within the regulatory framework, they face delays and inefficiencies, such as resolving commercial disputes and securing public services like permits.
  • Impact on Economic Development: Delays in resolving disputes and inefficiencies in business procedures directly affect the cost of doing business. While Tanzania has made some progress in enabling business operations, the remaining inefficiencies reduce business competitiveness and slow down economic expansion.
  • Challenges: The slow pace of dispute resolution and challenges in accessing public services mean businesses spend more time and resources complying with regulations, which could otherwise be used to expand their operations or innovate. For Tanzania's economy to grow faster, it needs to improve judicial efficiency, simplify regulatory processes, and make it easier for businesses to access financing and other services.
  • Potential for Growth: Enhanced operational efficiency would attract more businesses and investors, facilitating economic diversification and boosting sectors like trade, technology, and financial services.

Overall Economic Development Insights:

• Moderate Progress but Room for Improvement: Tanzania’s scores show that while there has been progress in developing a business-friendly environment, significant challenges remain. Improvements in public services and operational efficiency are crucial to creating an environment where businesses can thrive, which would in turn drive economic growth.
• Infrastructure and Service Delivery are Key Bottlenecks: Weaknesses in public services, particularly infrastructure like electricity and water, are limiting business productivity and deterring investment. Addressing these challenges would have a substantial positive impact on economic development, particularly in industrial and agricultural sectors, which rely heavily on reliable infrastructure.
• Regulatory and Judicial Reforms: The regulatory framework provides a foundation for economic growth, but further reforms are needed, particularly in market competition and insolvency laws. Accelerating dispute resolution and making regulations clearer and more predictable will foster a more dynamic and competitive private sector, driving economic expansion.

Strategic Recommendations for Economic Development:

1. Invest in Infrastructure: Improving utility services, especially reliable electricity and internet access, will lower operational costs and improve productivity across sectors, boosting overall economic growth.
2. Strengthen the Legal and Regulatory Environment: Enhancing regulations related to market competition, insolvency, and business disputes will create a more favorable environment for entrepreneurship and innovation, encouraging more domestic and foreign investment.
3. Improve Public Service Delivery: Streamlining processes such as tax filing, permit issuance, and customs procedures through digitalization would significantly reduce the cost of doing business and improve Tanzania’s global competitiveness.

Tanzania's economic performance in 2024 reflects a stable and resilient growth trajectory, marked by low inflation, steady interest rates, and robust export growth. Despite rising debt levels, the government has maintained fiscal discipline, balancing revenue collection with critical expenditures. Strong export performance, particularly in tourism and gold, alongside improving external sector stability, demonstrates the country's ability to manage global economic fluctuations while promoting sustainable growth. However, careful monitoring of debt and continued investment in key sectors will be crucial for ensuring long-term economic stability and development.

These indicate a stable inflation environment, improved government revenue collection, manageable debt growth, and robust performance in the export sector.

1. Inflation Rates (August 2024):

• Headline inflation increased slightly to 3.1%, up from 3.0% in July 2024.
• Food inflation rose to 2.8% (from 1% in July), driven by higher retail prices of rice, wheat flour, and dried sardines.
• Core inflation eased to 3.2%, while energy inflation dropped to 11.2% (from 14.6% in July), attributed to lower kerosene and fuel prices​.

2. Interest Rates:

• Overall lending rate averaged 15.26% in August 2024, with negotiated lending rates at 12.79%.
• Deposit rates slightly declined to 7.98% from 8.15% in July​.

3. Financial Markets:

• Treasury bills in August registered a 10.61% yield, up from 8.81% in July. The auction for 10- and 20-year Treasury bonds had 13.26% and 15.40% weighted average yields, respectively​.

4. Government Budget Operations (July 2024):

• Government revenue reached TZS 2,375.6 billion, meeting 97% of the monthly target.
• The government spent TZS 2,823.5 billion, of which TZS 1,898.3 billion was for recurrent expenses and TZS 925.3 billion for development expenses​.

5. Debt Development (August 2024):

• The national debt stock increased to USD 44,891.5 million, with 72.8% being external debt.
• External debt rose by 2.1% to USD 32,675.1 million, with new loans worth USD 433 million disbursed​​.

6. Export and Import Rates:

• Exports of goods and services grew to USD 15,064.6 million in August 2024, from USD 13,290.1 million in 2023.
  • Key drivers: increased tourism and gold exports (USD 3,189.4 million).
• Imports amounted to USD 16,427.5 million, with a focus on capital goods and refined petroleum products​.

7. External Sector Performance:

• The current account deficit narrowed to USD 2,567.2 million from USD 3,846.5 million a year earlier.
• Foreign exchange reserves increased to USD 5,379.7 million, sufficient to cover 4.4 months of imports​.

Tanzania for August 2024 highlights several key aspects of the country's current economic status. 

Tanzania's economy is in a phase of cautious growth with stable inflation, controlled interest rates, disciplined government spending, and strong export performance. However, the rising debt needs careful monitoring to ensure sustainability. If managed well, the growing exports, particularly in tourism and gold, along with improving government revenue, could support long-term economic growth.

1. Controlled Inflation:

• With headline inflation at 3.1%, Tanzania has managed to keep inflation low and within acceptable regional benchmarks (EAC and SADC targets). Although food inflation has risen due to price increases in staple items like rice and wheat flour, overall inflation remains stable.
• The drop in energy inflation (11.2%, down from 14.6%) reflects declining fuel prices, which helps contain cost pressures in the economy.

• Inflation is well managed, showing the government's effective control over price stability, which is critical for sustaining consumer purchasing power and maintaining economic confidence.

2. Stable Interest Rates:

• The overall lending rate of 15.26% and the relatively lower negotiated lending rate of 12.79% indicate that credit remains expensive, though stable. The narrow spread between lending and deposit rates shows reduced credit risk in the market.

• While interest rates are relatively high, they are stable, which may indicate cautious optimism in the financial sector. Businesses may find it challenging to access affordable loans for expansion, but the stability offers predictability.

3. Fiscal Discipline and Strong Revenue Collection:

• The government collected TZS 2,375.6 billion in July 2024, meeting 97% of its target. This was driven by higher tax compliance and increased imports. On the expenditure side, the government focused on critical spending, balancing recurrent and development costs.

• The Tanzanian government is showing strong fiscal discipline, crucial for maintaining investor confidence and managing public finances. A focus on development spending indicates ongoing infrastructure and growth-focused projects.

4. Growing Debt, But Still Manageable:

• Tanzania’s debt stock, at USD 44.9 billion, is increasing, with external debt making up 72.8%. However, this is partly due to borrowing for development projects. Debt service payments remain regular, but the rising debt level should be closely monitored.

• While the rising debt levels could become a concern if the trend continues unchecked, the fact that most borrowing is for development (such as transport and energy) shows that the government is focusing on infrastructure improvements. Debt sustainability will need ongoing vigilance.

5. Strong Export Growth:

• Exports of goods and services increased by 13.4% year-on-year, driven largely by higher tourism receipts and gold exports, while imports only grew marginally.

• The growth in exports, especially in traditional goods like cashew nuts and gold, shows Tanzania’s increasing competitiveness in key sectors. This also helps to narrow the current account deficit and improve the country’s foreign exchange reserves.

6. External Sector Stability:

• The current account deficit narrowed, and foreign exchange reserves rose to USD 5.4 billion, covering 4.4 months of imports, which meets international standards.

• Tanzania’s external sector is performing well, supported by strong tourism and export growth. This helps stabilize the currency and provides a buffer against external shocks, such as fluctuating commodity prices.

Zanzibar's economic performance in 2024 demonstrates resilience and recovery, particularly in the tourism sector, supported by stable inflation and improved agricultural outputs. The government's focus on enhancing revenue collection and infrastructure development reflects a strategic approach to boosting economic growth and ensuring sustainability. However, continued efforts are needed to address challenges such as trade imbalances and the need for diversified economic activities to strengthen the overall economy.

1. Economic Growth:

• Zanzibar’s economy is supported mainly by tourism, agriculture, and trade. The region has been experiencing a gradual recovery post-pandemic, particularly in the tourism sector, which is vital for local economic activity and job creation.

2. Tourism Sector:

• Tourism is the leading contributor to Zanzibar's economy. The region saw an increase in tourist arrivals in 2024, enhancing foreign exchange earnings and stimulating growth in related sectors such as hospitality, transport, and retail.
• As of 2024, tourist arrivals increased by 21.7% compared to the previous year, indicating strong recovery and growing international interest​.

3. Inflation Trends:

• Zanzibar has also witnessed stable inflation rates, mirroring trends seen on the mainland. In August 2024, the inflation rate in Zanzibar remained within target ranges, driven mainly by food prices.
• The twelve-month headline inflation was noted at around 3.1%, consistent with national trends, as food inflation contributed significantly to the overall price levels​.

4. Agricultural Performance:

• Agriculture, particularly the production of cloves, spices, and other crops, remains a critical part of Zanzibar’s economy.
• Clove production has been a significant focus, with efforts to boost yields and export quality contributing to economic performance. The value of agricultural exports is crucial for local income and foreign exchange​.

5. Trade Balance:

• Zanzibar continues to engage in trade with the mainland and international markets, exporting goods such as spices and seafood while importing food and other consumer goods.
• The trade balance for Zanzibar reflects the broader national trends, with efforts to enhance exports to improve the trade deficit.

6. Budgetary Operations:

• The local government has been focusing on improving revenue collection through enhanced tax compliance and the growth of economic activities, particularly in tourism and agriculture.
• Zanzibar’s government revenue has seen improvements, with increased local taxation and levies, which are crucial for financing public services and development initiatives​.

7. Development Initiatives:

• The government of Zanzibar has been investing in infrastructure development, particularly in transport and utilities, to support economic growth and improve the business environment.
• Projects aimed at enhancing tourism infrastructure, such as hotels, transport links, and service facilities, are ongoing to capitalize on the growing tourism sector.

Tanzania's government budget operations for July 2024 show a robust revenue collection process amid fiscal constraints. With a focus on recurrent and development expenditures, the government aims to maintain essential services and invest in growth, despite running a fiscal deficit. This approach underscores the importance of fiscal discipline and strategic planning in managing public finances.

In July 2024, Tanzania's government budget operations reflected a focus on fiscal discipline and efficient resource allocation. Here are the key details regarding government budget operations:

1. Government Revenue:

• The total government revenue, including collections by local government authorities (LGAs), amounted to TZS 2,375.6 billion, which represents 97% of the monthly target for July.
• Revenue collected by the central government specifically was TZS 2,261.9 billion, comprising:
  • Tax Revenue: TZS 1,916.9 billion
  • Non-Tax Revenue: TZS 345.0 billion

The strong performance in tax revenue was largely due to improved tax compliance and an increase in imported goods​

2. Government Expenditures:

• Total government expenditure for July 2024 reached TZS 2,823.5 billion, which included:
  • Recurrent Expenses: TZS 1,898.3 billion
  • Development Expenses: TZS 925.3 billion

The government has prioritized essential spending on wages, salaries, and debt servicing, while also focusing on development projects​.

3. Fiscal Balance:

• The fiscal deficit for the month can be calculated by subtracting total expenditure from total revenue:

Fiscal Deficit=Total Expenditure−Total Revenue

=2,823.5 billion−2,375.6 billion

=447.9 billion

This indicates that the government spent TZS 447.9 billion more than it collected in revenue during July, highlighting the ongoing need for financing mechanisms to cover budget shortfalls.

4. Revenue Sources:

• The key contributors to tax revenue included:
  • Taxes on Imports: This category saw significant growth due to the increase in import volumes, providing a boost to government finances.
  • Taxes on Local Goods and Services: Improved compliance and economic activity helped surpass revenue targets​.

5. Focus on Fiscal Consolidation:

• The government is committed to fiscal consolidation by aligning expenditures with available resources. This has involved prioritizing essential expenditures, particularly on first-charge costs like personal emoluments and debt servicing.

The budget operation demonstrates a commitment to maintaining fiscal discipline while also investing in development projects. This balance is crucial for sustaining economic growth, improving infrastructure, and enhancing public services. However, the fiscal deficit highlights the ongoing challenge of financing government operations, necessitating effective debt management and revenue generation strategies.