1. Current Account Balance

• Overview: The current account balance, a key indicator of Tanzania’s external sector, measures the net flow of goods, services, primary income (e.g., investment income), and secondary income (e.g., remittances). A narrowing deficit reflects improved export performance relative to imports, bolstered by tourism, minerals, and agricultural exports, as per the Third Five-Year National Development Plan (2021/22–2025/26).
• May 2025 Performance:
  • Current Account Deficit: USD 2,117.5 million (year ending May 2025), compared to USD 2,862.6 million (year ending May 2024), a 26% improvement (reduction of USD 745.1 million).
  • Context: The deficit further narrowed from USD 2,499.8 million in May 2024 (a 52% reduction from USD 5,221.8 million in May 2023) and USD 2,025.8 million in November 2024, reflecting a consistent trend of improvement. The deficit was 3.8% of GDP in 2023, projected at 4.2% in 2025, indicating manageable external imbalances.
• Economic Drivers:
  • Export Growth: Exports of goods and services rose 19.2% to USD 16,994.7 million (year ending May 2025) from USD 14,258.2 million in May 2024, driven by gold (USD 3,835.5 million, +23.1%), cashew nuts (+141%), coffee (+66.3%), tobacco (+32%), and tourism receipts (+7.0%). Gold accounted for 36.8% of goods exports, bolstered by favorable global prices.
  • Tourism Surge: Tourism receipts, a key service export, reached USD 3,910 million (estimated, 55.1% of service receipts), driven by a 10.6% increase in tourist arrivals to 2,170,360 from 1,961,870. Strategic marketing and infrastructure investments (e.g., Serengeti, Zanzibar) supported this growth.
  • Import Moderation: Imports of goods and services grew moderately by 9.6% to USD 17,686 million from USD 16,141.9 million, driven by industrial equipment and raw materials but tempered by lower petroleum imports (-7% to USD 2,578.5 million) due to price effects.
  • Income and Transfers: The primary income account deficit widened to USD 1,816.2 million (year ending January 2025) from USD 1,603.3 million, due to higher equity and interest payments abroad. The secondary income surplus declined to USD 589.1 million from USD 687.3 million, reflecting lower personal transfers.
• Implications:
  • Positive Shift: The 26% deficit reduction (USD 2,117.5 million) strengthens Tanzania’s external position, supported by foreign exchange reserves of USD 5,136.6 million (4.2 months of import cover). This exceeds the national benchmark of 4 months, ensuring resilience against external shocks.
  • Risks: The Tanzanian shilling’s 2.6% depreciation in 2025 and projected further weakening increase import costs, potentially widening the deficit if global commodity prices rise. Geopolitical tensions and climate shocks (e.g., La Niña) pose risks to export growth.
  • Outlook: The deficit is projected to stabilize at 4.2% of GDP in 2025, supported by continued export growth (6% GDP growth forecast,). Enhanced trade agreements (e.g., AfCFTA,) and infrastructure investments (e.g., SGR,) will sustain export competitiveness.

2. Exports – Services Receipts by Category

• Overview: Service receipts, a critical component of Tanzania’s export earnings, include travel (tourism), transport, and other services (e.g., construction, insurance, ICT). Tourism remains the largest contributor, driven by Tanzania’s natural attractions (e.g., Serengeti, Kilimanjaro) and policy reforms to boost arrivals.
• May 2025 Performance:
  • Total Services Receipts: USD 7,099.8 million (year ending May 2025), up 9.2% from USD 6,499.4 million in May 2024.
  • Category Breakdown:
    • Travel (Tourism): 55.1% (~USD 3,910 million, estimated), driven by a 10.6% surge in tourist arrivals to 2,170,360 from 1,961,870.
    • Transport Services: ~20% (~USD 1,420 million, estimated), fueled by higher cross-border freight and port-related activity.
    • Other Services: ~25% (~USD 1,769.8 million, estimated), including construction, insurance, finance, ICT, royalties, etc.
• Context and Analysis:
  • Tourism Dominance: Tourism receipts (~USD 3,910 million) accounted for 55.1% of service exports and 24.1% of total goods and services exports (). The 10.6% growth in arrivals (2,170,360) reflects investments in infrastructure (e.g., SGR access to Mikumi National Park,) and marketing (e.g., World Travel Awards 2025,). In 2024, arrivals reached 2,662,219 (+20%), with Europe (71.6% of Zanzibar arrivals) and Kenya leading (). The sector’s GDP contribution is projected to hit 19.5% in 2025/26.
  • Transport Services: The ~20% share (~USD 1,420 million) reflects increased freight and port activity, driven by regional trade (e.g., 24% rise in intra-African trade to USD 5.18 billion,). Investments in Dar es Salaam port and SGR enhance logistics.
  • Other Services: The ~25% share (~USD 1,769.8 million) includes growing ICT and financial services, supported by the Tanzania Instant Payment System (TIPS, 453.7 million transactions in 2024,). Construction services benefit from infrastructure projects (e.g., Julius Nyerere Hydropower Plant).
  • Economic Drivers: The 9.2% growth in service receipts aligns with a 15.1% overall export increase in 2024 (USD 16,093.1 million,). Policy reforms, such as 80% cuts in tourism license fees () and AfCFTA participation (), boost competitiveness. The 2025/26 tourism budget (TZS 359.9 billion) supports promotion and conservation.
• Implications:
  • Strengths: Tourism’s 55.1% share drives foreign exchange earnings, supporting reserves (USD 5,136.6 million, Document, Page 12). Transport services (20%) benefit from regional trade integration (e.g., EAC, SADC).
  • Challenges: Tourism’s reliance on European markets (71.6% of Zanzibar arrivals) risks exposure to global economic slowdowns (). Transport services face rising freight costs, potentially offsetting gains.
  • Outlook: Continued investment in tourism (e.g., Marriott’s Mapito Safari Camp,) and logistics (e.g., SGR,) will sustain growth. Diversifying markets (e.g., Asia, Americas) and enhancing ICT services can further boost receipts.

3. Imports – Services Payments

• Overview: Service payments cover Tanzania’s expenditures on foreign services, including freight, construction, insurance, and financial services. Rising payments reflect increased economic activity, particularly in infrastructure and manufacturing, but elevate import costs.
• May 2025 Performance:
  • Total Services Payments: USD 2,841.7 million (year ending May 2025), up 27.0% from USD 2,324.9 million in May 2024.
  • Key Components:
    • Freight (Transport): 47.7% (~USD 1,356.5 million, estimated), driven by higher import volumes of industrial equipment and raw materials.
    • Other Services: ~52.3% (~USD 1,485.2 million, estimated), including construction, insurance, financial services, telecommunications, etc.
• Context and Analysis:
  • Freight Dominance: Freight payments (~USD 1,356.5 million, 47.7%) reflect increased imports of industrial transport equipment, raw materials, and accessories. Imports of goods rose to USD 9,894.8 million (+27.5% from USD 7,758.7 million), driven by manufacturing and construction needs (Document, Page 14). The Tanzania Shipping Agency Corporation’s (TASAC) monopoly on freight services () may elevate costs, despite a 7% decline in petroleum imports.
  • Other Services: The ~52.3% share (~USD 1,485.2 million) includes payments for construction (e.g., SGR, hydropower projects), insurance, and ICT services. The rise aligns with a 10.2% increase in service payments (USD 2,533.8 million in January 2025,), driven by infrastructure investments.
  • Economic Drivers: The 27.0% increase in service payments reflects robust economic activity, with imports of goods and services up 9.6% to USD 17,686 million (). Industrial supplies and transport equipment imports support manufacturing (9% of GDP) and construction (16% of GDP). Global shipping cost pressures and shilling depreciation (2.6%, Document, Page 12) amplify freight costs.
• Implications:
  • Cost Pressures: The 47.7% freight share increases import costs, straining the trade balance (USD 1,009.09 million deficit in Q3 2024,). Shilling depreciation exacerbates this, as noted in October 2024.
  • Economic Activity: Rising payments reflect infrastructure and manufacturing growth, aligned with the 2025/26 budget’s TZS 7.72 trillion capital spending. However, reliance on imported inputs risks external vulnerabilities.
  • Outlook: Moderating freight costs through regional logistics improvements (e.g., Dar es Salaam port upgrades,) and reducing petroleum imports (down 7%,) can ease pressures. Enhanced domestic production (e.g., manufacturing,) will reduce import dependence.

Additional Insights and Outlook

• External Position Strength: The 26% deficit reduction (USD 2,117.5 million) reflects robust export growth (19.2%, USD 16,994.7 million), particularly in tourism (55.1% of service receipts) and gold (36.8% of goods exports). Reserves (USD 5,136.6 million, 4.2 months of import cover) ensure stability.
• Tourism and Transport: Tourism’s USD 3,910 million contribution and transport’s ~USD 1,420 million highlight sectoral strength. The 2025/26 tourism budget (TZS 359.9 billion) and SGR investments will sustain growth.
• Import Challenges: The 27.0% rise in service payments (USD 2,841.7 million), driven by freight (47.7%), reflects infrastructure demand but strains the trade balance. Shilling depreciation (2.6%) and global shipping costs exacerbate this.
• Policy Support: The 2025/26 budget’s TZS 56.49 trillion plan and IMF support (USD 441 million in April 2025) bolster export competitiveness (). AfCFTA participation and trade agreements (e.g., Tanzania-Mozambique,) enhance regional trade.
• Risks: Shilling depreciation, geopolitical tensions, and climate shocks (e.g., La Niña) risk widening the deficit (,). Overreliance on tourism and gold exposes the economy to global demand fluctuations.
• Outlook: Sustained export growth (projected 6% GDP growth in 2025,) and infrastructure investments (e.g., Dar es Salaam port,) will maintain the positive trend. Diversifying exports (e.g., horticulture, ICT) and reducing import reliance (e.g., domestic manufacturing) are critical for long-term stability

Tanzania External Sector Performance - May 2025: Key Figures

Note: USD estimates based on provided percentage shares. Exchange rate: ~TZS 2,698/USD.