Zanzibar’s economy grew by 6.2% in 2024, up from 5.6% in 2023, driven by tourism (7.1%) and construction (5.8%), while agriculture lagged at 3.5%. However, inflation rose to 4.3% in January 2025, fueled by higher food (+5.6%) and transport costs (+4.8%). The trade deficit widened to USD 387.4 million, as imports increased to USD 521.6 million (+4.5%), outpacing exports of USD 134.2 million (+2.9%). Despite a 5.2% rise in revenue to TZS 115.6 billion, government spending exceeded collections by TZS 22.3 billion, maintaining a budget deficit.
1. Zanzibar’s GDP Growth: Strong Expansion Driven by Services and Industry
Zanzibar’s economy grew by 6.2% in 2024, up from 5.6% in 2023.
Growth was mainly driven by services (7.1%) and industry (5.8%), while agriculture expanded by 3.5%.
Sectoral Growth Breakdown (2024 GDP Growth Rates)
Sector
Growth Rate (%)
Key Contributors
Services
7.1%
Tourism, trade, transportation
Industry
5.8%
Construction, manufacturing
Agriculture
3.5%
Cloves, seaweed, fishing
Overall GDP
6.2%
Stronger than 2023 (5.6%)
What It Means:
✅ Tourism and trade are driving economic expansion, supported by increased visitor arrivals. ✅ The construction sector is growing, boosting industrial performance. ⚠ Agriculture is growing slowly (3.5%), indicating the need for modernization and investment.
2. Inflation: Slight Increase Due to Rising Food and Transport Costs
Inflation in Zanzibar stood at 4.3% in January 2025, up from 4.0% in December 2024.
The increase was mainly driven by higher food prices (+5.6%) and transport costs (+4.8%).
What It Means:
⚠ Higher food prices are putting pressure on household purchasing power. ✅ Inflation remains moderate and within the acceptable range.
3. Trade Performance: Imports Rising Faster than Exports
Exports Grew but Remain Low Compared to Imports
Total exports reached USD 134.2 million in January 2025, an increase of 2.9% from December 2024.
Clove exports (USD 46.8 million) and seaweed exports (USD 12.1 million) remained the top earners.
Imports Increased, Widening Trade Deficit
Total imports rose to USD 521.6 million (+4.5%), led by fuel and construction materials.
The trade deficit widened to USD 387.4 million, reflecting higher demand for imported goods.
What It Means:
⚠ Zanzibar remains a net importer, increasing reliance on foreign exchange inflows from tourism and remittances. ✅ Growth in clove and seaweed exports helps sustain the economy.
4. Government Revenue and Spending: Improved Collection but Budget Deficit Persists
Total revenue collection reached TZS 115.6 billion in January 2025, a 5.2% increase from December 2024.
Tax revenue accounted for 85.3% of total revenue, supported by higher VAT and import duties.
Total government expenditure stood at TZS 137.9 billion, leaving a budget deficit of TZS 22.3 billion.
What It Means:
✅ Revenue collection is improving, reducing reliance on external funding. ⚠ The government continues to spend more than it collects, increasing the need for budget control measures.
Summary of Key Trends in Zanzibar’s Economy (January 2025)
Indicator
January 2025
Comparison with December 2024
GDP Growth (2024)
6.2%
Up from 5.6% in 2023
Inflation Rate
4.3%
Up from 4.0%
Total Exports
USD 134.2 million
+2.9%
Total Imports
USD 521.6 million
+4.5%
Trade Deficit
USD 387.4 million
Widened
Revenue Collection
TZS 115.6 billion
+5.2%
Government Spending
TZS 137.9 billion
Budget deficit of TZS 22.3 billion
Economic Implications of Zanzibar’s Performance
🔹 Positive Signs: ✅ Economic growth remains strong (6.2%), driven by tourism and construction. ✅ Revenue collection is improving, reducing fiscal pressure. ✅ Clove and seaweed exports are supporting foreign exchange earnings.
🔸 Challenges: ⚠ Inflation is rising, increasing the cost of living. ⚠ Imports are growing faster than exports, widening the trade deficit. ⚠ Government spending exceeds revenue, creating a budget deficit.
Key Insights from Zanzibar’s Economic Performance (January 2025)
1. Strong Economic Growth (6.2%) Driven by Tourism and Industry
Zanzibar’s economy expanded by 6.2% in 2024, up from 5.6% in 2023.
Growth was driven by tourism (services up 7.1%) and construction (industry up 5.8%).
What It Means:
✅ Tourism recovery is fueling service sector growth, increasing employment and foreign exchange. ✅ Construction and industrial expansion indicate long-term development and infrastructure improvements. ⚠ Agriculture is growing slowly (3.5%), meaning rural incomes and food security could be affected.
2. Inflation is Rising (4.3%), Driven by Higher Food and Transport Costs
Inflation increased to 4.3% in January 2025, from 4.0% in December 2024.
Food prices (+5.6%) and transport costs (+4.8%) were the main drivers.
What It Means:
⚠ The rising cost of living could reduce household purchasing power. ✅ Inflation remains manageable but needs monitoring to prevent further increases.
3. Trade Deficit Widening as Imports Outpace Exports
Total exports reached USD 134.2 million (+2.9%), driven by clove exports (USD 46.8 million) and seaweed (USD 12.1 million).
Imports rose to USD 521.6 million (+4.5%), mainly due to higher fuel and construction material imports.
Trade deficit widened to USD 387.4 million, increasing Zanzibar’s reliance on foreign currency inflows.
What It Means:
⚠ Zanzibar depends heavily on imports, making the economy vulnerable to global price fluctuations. ✅ Growing exports of cloves and seaweed help offset some trade losses.
4. Government Revenue is Growing, But Deficit Remains
Total revenue collection rose to TZS 115.6 billion (+5.2%), supported by higher tax collection (85.3% of revenue).
Total expenditure stood at TZS 137.9 billion, leaving a budget deficit of TZS 22.3 billion.
What It Means:
✅ Tax revenues are improving, reducing reliance on external aid. ⚠ The government continues to spend more than it collects, requiring better budget management.
Overall Economic Implications
🔹 Positive Signs: ✅ Strong economic growth (6.2%) shows resilience and investment expansion. ✅ Tourism and construction remain key drivers of Zanzibar’s economy. ✅ Revenue collection is improving, supporting government operations.
🔸 Challenges: ⚠ Inflation is rising, increasing living costs for households. ⚠ Imports are outpacing exports, widening the trade deficit. ⚠ Government spending exceeds revenue, requiring fiscal adjustments.
EAC Regional Headline Inflation:
The annual Headline Inflation in the EAC region was 6.7% in March 2024, up from 4.1% in February 2024. This figure indicates a region-wide increase in general prices.
By Country:
Burundi: 26% headline inflation in 2023.
Kenya: 7.7% in 2023.
Rwanda: 12.2% in 2023.
South Sudan: High fluctuation at 22.5% as of March 2024.
Tanzania: 3.8% in 2023.
Uganda: 5.4% in 2023nual Average Headline Inflation**:
Annual Average Headline Inflation
For the EAC region, the annual average headline inflation for the fiscal year 2022/23 was 7.2%, up from 4.2% in the previous fiscal year.
By Country:
Burundi: 26.0% in 2023.
Kenya: 7.7%.
Rwanda: 12.2%.
South Sudan: 2.4%.
Tanzania: 3.8%.
Uganda: 5.4%.
Core Inflation:
Annual Core Inflation for the EAC region stood at 7.1% in March 2024, rising from 4.3% in February 2024.
By Country:
Burundi: 19.9% average in 2023.
Kenya: 5.9%.
Rwanda: 10%.
Tanzania: 2%.
Uganda: 4.7%.
South Sudan: 9.8%.
The East African Community (EAC) region is projected to experience gradual inflation stabilization through 2030, reflecting coordinated economic policies aimed at controlling price pressures. In 2023, the EAC’s headline inflation stood at 6.7%, with variations across member states, from a low of 3.8% in Tanzania to a high of 26% in Burundi. Forecasts indicate a decline across all EAC countries, with regional headline inflation expected to reach 5.8% by 2030. Significant reductions are anticipated for high-inflation economies, such as Burundi, projected to decrease to 14.5%, and South Sudan to 10.8%, supporting a more balanced and predictable economic environment in the EAC.
Headline Inflation: This forecast shows a gradual decrease in headline inflation across all EAC countries, with high-inflation economies like Burundi and South Sudan expected to make the most significant adjustments. This trend suggests improved economic stability, with lower inflation benefiting household purchasing power and business predictability.
EAC Region: Reduction from 6.7% to 5.8% reflects region-wide stabilization efforts.
Burundi: A sharp decline from 26% to 14.5% indicates ambitious policy interventions.
Tanzania: Remains the most stable, showing minimal fluctuation, reflecting sound inflation management.
Annual Average Headline Inflation: Annual average inflation also reflects a gradual decline, with all countries, especially Burundi and South Sudan, aiming for more moderate rates. The EAC region is projected to ease from 7.2% in 2023 to 6.3% by 2030, showing collective efforts toward reducing inflationary pressures.
Burundi and South Sudan: Show high initial inflation but strong projected declines, indicating substantial adjustments.
Kenya and Uganda: Project smaller declines, signifying their comparatively stable inflation environment.
Core Inflation: Core inflation, which excludes volatile items like food and fuel, is expected to decline steadily. This trend indicates improvements in price stability for essential goods and services across the region.
Burundi: High core inflation (19.9%) is projected to halve by 2030, suggesting strong measures to control price instability.
EAC Region: The reduction from 7.1% to 5.7% shows a region-wide commitment to stable core prices.
Tanzania and Uganda: Project relatively stable and low core inflation, indicating well-managed inflation policies.
The forecasted headline inflation for each EAC country and the region through 2030
The forecasted headline inflation trends for each EAC country through 2030 show a gradual decline across the region, reflecting stabilization efforts:
EAC Region: Inflation is expected to reduce from 6.7% in 2023 to 5.8% by 2030, indicating a steady regional stabilization.
Burundi: Starting from a high of 26% in 2023, inflation is projected to decrease significantly to 14.5% by 2030, due to anticipated economic adjustments.
Kenya: Moderate declines are forecasted, with inflation reducing slightly from 7.7% in 2023 to 7.2% by 2030, suggesting a relatively stable inflation rate.
Rwanda: Expected to see a gradual decline from 12.2% in 2023 to 9.9% by 2030 as price pressures ease.
South Sudan: Volatile inflation is set to decrease from 22.5% in 2023 to 10.8% by 2030, reflecting significant economic stabilization efforts.
Tanzania: Remaining stable, inflation is forecasted to stay around 3.7% throughout the period, reflecting consistent economic stability.
Uganda: Inflation is expected to gradually decline from 5.4% in 2023 to 4.7% by 2030, indicating a steady control over price levels.
Year
EAC Region
Burundi
Kenya
Rwanda
South Sudan
Tanzania
Uganda
2023
6.7%
26.0%
7.7%
12.2%
22.5%
3.8%
5.4%
2024
6.6%
23.9%
7.6%
11.8%
20.3%
3.8%
5.3%
2025
6.4%
22.0%
7.5%
11.5%
18.2%
3.8%
5.2%
2026
6.3%
20.3%
7.5%
11.1%
16.4%
3.7%
5.1%
2027
6.2%
18.6%
7.4%
10.8%
14.8%
3.7%
5.0%
2028
6.1%
17.1%
7.3%
10.5%
13.3%
3.7%
4.9%
2029
5.9%
15.8%
7.2%
10.2%
12.0%
3.7%
4.8%
2030
5.8%
14.5%
7.2%
9.9%
10.8%
3.7%
4.7%
Annual Average Headline Inflation Forecast for each EAC country and the region through 2030
The projected Annual Average Headline Inflation for each East African Community (EAC) country and the region through 2030 shows a gradual reduction in inflation rates, with stabilization in most countries as economic policies are anticipated to moderate inflationary pressures:
EAC Region: Starting at 7.2% in 2023, inflation is expected to slowly decline to 6.3% by 2030, reflecting regional efforts to stabilize prices.
Burundi: With the highest initial inflation of 26.0% in 2023, Burundi's rate is projected to decrease significantly, reaching 14.5% by 2030, due to aggressive measures to curb inflation.
Kenya: Kenya’s inflation is relatively stable, moving from 7.7% in 2023 to 7.2% by 2030, showing a slight reduction as inflationary pressures ease.
Rwanda: Starting at 12.2% in 2023, Rwanda’s inflation is forecasted to drop to 9.9% by 2030, as price growth stabilizes.
South Sudan: With a volatile starting rate of 2.4% in 2023, South Sudan’s inflation is expected to decline gradually to 1.6% by 2030.
Tanzania: Starting with a low rate of 3.8% in 2023, Tanzania’s inflation is projected to remain steady, reaching 3.7% by 2030, indicating ongoing price stability.
Uganda: Inflation in Uganda begins at 5.4% in 2023, decreasing gradually to 4.7% by 2030 as inflation moderates in line with regional trends.
Year
EAC Region
Burundi
Kenya
Rwanda
South Sudan
Tanzania
Uganda
2023
7.2%
26.0%
7.7%
12.2%
2.4%
3.8%
5.4%
2024
7.1%
23.9%
7.6%
11.8%
2.3%
3.8%
5.3%
2025
6.9%
22.0%
7.5%
11.5%
2.1%
3.8%
5.2%
2026
6.8%
20.3%
7.5%
11.1%
2.0%
3.7%
5.1%
2027
6.6%
18.6%
7.4%
10.8%
1.9%
3.7%
5.0%
2028
6.5%
17.1%
7.3%
10.5%
1.8%
3.7%
4.9%
2029
6.4%
15.8%
7.2%
10.2%
1.7%
3.7%
4.8%
2030
6.3%
14.5%
7.2%
9.9%
1.6%
3.7%
4.7%
Core Inflation Forecast for each EAC country and the region through 2030
The core inflation forecast for the EAC region and each country through 2030 reflects a gradual reduction in inflation rates as countries aim for economic stabilization:
EAC Region: Core inflation is expected to reduce from 7.1% in 2023 to 5.7% by 2030, indicating an overall decline in price volatility across the region.
Burundi: Starting at a high of 19.9% in 2023, core inflation is projected to decrease significantly to 10.3% by 2030, reflecting efforts to control extreme inflation.
Kenya: A gradual decrease is forecasted from 5.9% in 2023 to 5.1% by 2030, showing moderate inflation stability.
Rwanda: Core inflation is expected to decrease from 10.0% in 2023 to 7.5% in 2030, suggesting improvement but a slower decline.
South Sudan: High initial volatility at 9.8% in 2023 is projected to decline to 5.9% by 2030, aiming for more stability.
Tanzania: Core inflation remains relatively stable, slightly declining from 2.0% in 2023 to 1.9% by 2030, indicating a well-managed inflation rate.
Uganda: Projected to decrease from 4.7% in 2023 to 3.8% by 2030, showing a steady inflation management path.
Year
EAC Region
Burundi
Kenya
Rwanda
South Sudan
Tanzania
Uganda
2023
7.1%
19.9%
5.9%
10.0%
9.8%
2.0%
4.7%
2024
6.9%
18.1%
5.8%
9.6%
9.1%
2.0%
4.6%
2025
6.7%
16.5%
5.7%
9.2%
8.5%
2.0%
4.4%
2026
6.5%
15.0%
5.6%
8.9%
7.9%
2.0%
4.3%
2027
6.3%
13.7%
5.4%
8.5%
7.3%
2.0%
4.2%
2028
6.1%
12.4%
5.3%
8.2%
6.8%
2.0%
4.0%
2029
5.9%
11.3%
5.2%
7.8%
6.3%
1.9%
3.9%
2030
5.7%
10.3%
5.1%
7.5%
5.9%
1.9%
3.8%
Sub-Saharan Africa's economic outlook for 2024 presents a picture of gradual recovery, with growth projected to rise from 2.4% in 2023 to 3% in 2024, and reaching 4% by 2025-2026. This recovery is driven by improving private consumption and investment, fueled by easing inflation, which is expected to decline from 7.1% in 2023 to 4.8% in 2024, allowing for potential monetary policy rate cuts. However, the region’s macroeconomic performance remains challenged by high public debt, estimated at 58% of GDP in 2024, and a fiscal deficit projected to improve to 3.3% of GDP. Risks to the outlook include conflict (e.g., in Sudan), climate-related disasters, and the region's vulnerability to external shocks, with 53% of low-income countries facing high risk of debt distress. Addressing these challenges requires fiscal reforms and targeted investments to ensure sustained growth and stability.
1. Growth Outlook in Sub-Saharan Africa:
Growth Recovery: Economic activity in Sub-Saharan Africa is expected to grow by 3% in 2024, up from 2.4% in 2023, and further accelerate to 4% by 2025-2026.
Per Capita Growth: Real income per capita is forecasted to grow by 0.5% in 2024 and 1.4% in 2025.
Strong Performers: Countries like Côte d’Ivoire (6.5%), Uganda (6%), and Tanzania (5.4%) are among the top performers expected to post over 5% growth in 2024.
2. Growth Environment:
Private Consumption and Investment: These are the main drivers of growth recovery, boosted by easing inflation which is expected to decline from 7.1% in 2023 to 4.8% in 2024.
Inflation Decline: Inflation is declining across the region, with around 70% of countries expected to register lower inflation rates in 2024.
Monetary Policy: As inflation cools, countries may pursue monetary policy rate cuts, fostering greater investment.
Public Debt: Government debt remains high at around 58% of GDP in 2024. Sub-Saharan African countries are expected to pay US$19 billion in public external debt service, mostly to private creditors.
Fiscal Balance: The median fiscal deficit is projected to decrease from 3.9% of GDP in 2023 to 3.3% of GDP in 2024, with efforts to raise revenue and reduce expenditure.
4. Risks to the Outlook:
High Debt: An elevated debt burden reduces the fiscal space for governments to invest in critical infrastructure and human capital.
Conflict and Climate Change: Ongoing conflict, such as in Sudan, and climate-related disasters, including floods and droughts, are key risks affecting growth and food security in the region.
The Africa's Pulse October 2024 report key points about Sub-Saharan Africa's economic outlook
Sub-Saharan Africa is experiencing a gradual recovery in economic growth, but significant challenges like high debt, conflict, climate change, and limited fiscal space present risks to sustained progress. The region needs to address these challenges through fiscal reforms, targeted investments, and efforts to enhance macroeconomic stability.
Economic Growth Recovery: The region's economy is projected to grow by 3% in 2024, up from 2.4% in 2023, with further acceleration to 4% by 2025-2026. This is driven mainly by private consumption and investment, supported by easing inflation and anticipated interest rate cuts. However, the growth recovery remains modest compared to other global regions.
Inflation and Consumption: Inflation is expected to decline from 7.1% in 2023 to 4.8% in 2024, improving the purchasing power of households, which in turn supports private consumption. This cooling of inflation allows for potential monetary policy easing, encouraging investment and economic activity.
Macroeconomic Performance: Despite growth prospects, the region faces significant challenges:
High Debt Levels: Public debt remains at 58% of GDP, with US$19 billion in debt service payments, mostly owed to private creditors. This reduces the fiscal space for essential investments in infrastructure and social services.
Fiscal Balance: Fiscal deficits are improving slightly, from 3.9% of GDP in 2023 to 3.3% in 2024, thanks to revenue collection efforts and spending cuts. However, the region's debt burden continues to limit overall progress.
Risks to the Outlook:
Conflict and Climate Change: Ongoing conflicts, such as the war in Sudan, and extreme weather events (floods, droughts) are major risks to economic stability. These challenges undermine growth, disrupt food security, and exacerbate poverty in affected countries.
Vulnerability: Over 53% of low-income countries in Sub-Saharan Africa are at high risk of debt distress, and many countries are vulnerable to external shocks due to their high reliance on global financing and commodity exports.
Source: Africa’s Pulse October 2024 report
Global inflation is projected to moderate to 3.5% in 2024, with a further decline to 2.8% by 2026, aligning with central bank targets. However, inflation remains elevated, especially in Emerging Market and Developing Economies (EMDEs), where it is expected to reach 4.0% in 2024 before easing to 3.5% by 2026. Persistent inflationary pressures are driven by high energy and food prices, geopolitical tensions, and supply chain disruptions. Core inflation, particularly in the services sector, remains stubborn, requiring cautious global monetary policies, with interest rates projected to stay elevated through 2026.
1. Global Inflation Trends
Global inflation is expected to moderate gradually, with an average of 3.5% in 2024, down from the high levels seen during the COVID-19 pandemic recovery. However, this pace of disinflation is slower than previously anticipated.
By 2026, global inflation is projected to stabilize around 2.8%, which is broadly consistent with central bank targets.
2. Regional Inflation Dynamics
Advanced Economies: Inflation in advanced economies is expected to decline gradually but will remain above pre-pandemic levels for some time. Central banks are likely to continue cautious monetary policies.
In the United States, inflation is expected to ease but remain slightly elevated, especially in the services sector.
The Euro Area is experiencing a slower inflation decline due to higher energy and food prices.
Emerging Market and Developing Economies (EMDEs): Inflation in EMDEs is projected to slow down, but persistent price pressures, particularly in food and energy, will keep inflation higher than desired.
EMDEs will see inflation converge toward 4.0% in 2024 and 3.5% by 2026.
In Sub-Saharan Africa, inflation is expected to remain higher due to commodity price volatility and supply constraints.
3. Core Inflation
Core inflation (which excludes volatile items like food and energy) remains stubbornly high in many economies, driven by strong growth in services prices. This is particularly true in the United States and other advanced economies.
Service sector inflation is slower to recede because of ongoing wage pressures and sticky prices in areas like housing and healthcare.
4. Factors Contributing to Persistent Inflation
Geopolitical tensions and supply chain disruptions continue to create price volatility, especially in commodities like oil and gas.
High energy prices have put upward pressure on inflation, although energy prices are expected to stabilize gradually.
Food inflation remains a concern, especially in developing economies. Fluctuations in global grain supplies and climate-related disruptions contribute to price spikes.
5. Commodity Prices and Inflation
Oil prices are projected to remain slightly elevated in 2024, averaging $84 per barrel, contributing to inflationary pressures in energy-dependent regions.
Agricultural prices, including food commodities, are expected to stabilize, but ongoing supply chain issues and climate disruptions could trigger temporary inflationary spikes.
6. Monetary Policy and Inflation Control
Central banks in both advanced and developing economies are expected to remain cautious about easing monetary policies due to persistent inflationary pressures.
Interest rates are expected to stay elevated for an extended period. Global policy rates are forecast to average around 4% through 2026, which is double the average of the previous two decades.
EMDEs face the challenge of balancing inflation control with supporting economic growth. Inflation targeting and careful monetary policy management remain crucial.
7. Risks to Inflation
There is a risk that inflation may persist longer than expected due to several factors:
Geopolitical tensions could lead to further supply disruptions, especially in energy markets.
Trade fragmentation and rising protectionism could lead to price increases for goods.
Climate-related natural disasters could disrupt food production, leading to spikes in food prices.
Key Figures:
Global inflation: Expected at 3.5% in 2024, moderating to 2.8% by 2026.
Advanced economies: Expected inflation is lower but will stabilize around 2.5% by 2026.
EMDEs: Inflation projected at 4.0% in 2024, gradually declining to 3.5% by 2026.
Oil prices: Forecast to average $84 per barrel in 2024, impacting energy-dependent economies.
Summary:
Global inflation is moderating but remains elevated, particularly in emerging markets and developing economies.
Inflation pressures from energy and food prices are expected to ease gradually, but geopolitical risks and supply disruptions could trigger temporary inflationary spikes.
Core inflation, particularly in services, remains persistent, necessitating cautious monetary policies by central banks globally.
Source: The Global Economic Prospects June 2024 report
