Tanzania’s external sector strengthened in the year ending July 2025, with the current account deficit narrowing by 23.4% to USD 2,079.2 million, compared to USD 2,713.5 million in 2024. The improvement was driven by robust growth in services exports, which rose 8% to USD 7,175.6 million, led by tourism (USD 3,871.9m, +3.8%) and transport services (USD 2,631.9m, +13.8%). At the same time, services imports surged 21.2% to USD 2,925.1 million, largely due to higher transport costs (USD 1,458.1m, +12.7%) and a sharp rise in other services payments (USD 840.2m, +106.9%), even as travel-related payments fell. This combination reflects Tanzania’s resilience in boosting exports while managing rising import pressures, ultimately reducing external imbalances and supporting foreign reserve stability at over USD 6.1 billion.

1. Current Account Balance

• Deficit: USD 2,079.2 million (year ending July 2025).
• Improved compared to USD 2,713.5 million in the same period of 2024 (23.4% narrowing).
• Improvement driven by higher exports of goods & services, outpacing import growth.

2. Exports – Services Receipts

• Total services receipts: USD 7,175.6 million (up from USD 6,643.8 million in July 2024, +8%).
• Breakdown by category (year ending July 2025):
  • Travel (Tourism): USD 3,871.9m (up from 3,730.2m in 2024, +3.8%).
  • Transport: USD 2,631.9m (up from 2,312.9m in 2024, +13.8%).
  • Other services (construction, insurance, ICT, business, etc.): USD 671.8m (up from 600.7m in 2024, +11.8%).

3. Imports – Services Payments

• Total services payments: USD 2,925.1 million (up from USD 2,414.5 million in July 2024, +21.2%).
• Breakdown by category (year ending July 2025):
  • Transport: USD 1,458.1m (up from 1,293.5m in 2024).
  • Travel: USD 626.7m (down slightly from 714.7m in 2024).
  • Other services: USD 840.2m (up from 406.3m in 2024).

Table 1: Current Account Balance (USD Million)

Table 2: Services Receipts by Category (Exports, USD Million)

Table 3: Services Payments by Category (Imports, USD Million)

Economic Implications of External Sector Performance – Year Ending July 2025

1. Current Account Balance

• Deficit and Improvement: The current account recorded a deficit of USD 2,079.2 million, a 23.4% narrowing from USD 2,713.5 million in July 2024, driven by higher exports of goods and services outpacing import growth.
• Economic Meaning: The reduced deficit reflects a strengthening external position, supported by robust export performance (e.g., gold at USD 3,977.6 million, tourism at USD 3,871.9 million) and controlled import growth. This aligns with Tanzania’s 6% GDP growth projection, enhancing foreign exchange reserves (USD 6,194.4 million), which cover 4.8 months of imports—above the national benchmark. The improvement reduces pressure on the TZS (stable at 2,666.79/USD), supporting monetary easing (CBR 5.75%). However, the persistent deficit (3.8% of GDP per IMF estimates) indicates ongoing reliance on external financing (external debt at USD 32,955.5 million), necessitating sustained export growth to achieve balance.

2. Exports – Services Receipts

• Total Growth: Services receipts rose to USD 7,175.6 million, an 8% increase from USD 6,643.8 million in July 2024.
• Breakdown:
  • Travel (Tourism): USD 3,871.9 million (+3.8% from USD 3,730.2 million), accounting for 54% of receipts.
  • Transport: USD 2,631.9 million (+13.8% from USD 2,312.9 million).
  • Other Services (construction, insurance, ICT, business): USD 671.8 million (+11.8% from USD 600.7 million).
• Economic Significance: The 54% tourism share underscores its role as a foreign exchange anchor, bolstered by 2,193,322 arrivals in June 2025 (up 10% year-on-year), reflecting global travel recovery. The 13.8% transport growth signals improved logistics (e.g., Dar es Salaam port upgrades), supporting trade (exports at USD 9,479.4 million). Other services’ 11.8% rise indicates diversification into ICT and construction, aligning with infrastructure investments (28.6% of external debt use). This growth enhances reserves and reduces current account pressure, though tourism’s dominance (54%) exposes the economy to global travel risks (e.g., pandemics).

3. Imports – Services Payments

• Total Increase: Services payments surged to USD 2,925.1 million, a 21.2% rise from USD 2,414.5 million in July 2024.
• Breakdown:
  • Transport: USD 1,458.1 million (+12.7% from USD 1,293.5 million).
  • Travel: USD 626.7 million (–12.3% from USD 714.7 million).
  • Other Services: USD 840.2 million (+106.9% from USD 406.3 million).
• Economic Implications: The 21.2% increase reflects heightened import activity, with transport growth (12.7%) tied to freight costs for goods imports (USD 17,603.1 million). The 106.9% jump in other services (e.g., business, insurance) suggests rising costs for industrial inputs and operations, linked to manufacturing and construction booms (e.g., Julius Nyerere Hydropower Plant). The 12.3% travel drop may indicate lower outbound tourism or business travel, offsetting some pressure. This rapid rise, outpacing export growth (8%), strains the current account, though reserves and export inflows mitigate immediate risks.

Summary of Broader Economic Significance

• External Resilience: The 23.4% deficit narrowing and 8% export growth signal a robust external sector, supporting Tanzania’s 6% growth trajectory and reserve adequacy (4.8 months). Tourism (54%) and transport (37%) drive receipts, aligning with Vision 2050 goals.
• Trade Dynamics: Export outperformance over imports strengthens the TZS and reduces financing needs, but the 21.2% import surge (especially other services) highlights import dependency, a challenge noted by the World Bank for structural transformation.
• Risks and Opportunities: Tourism reliance (54%) and import cost spikes (106.9% in other services) pose vulnerabilities to global shocks (e.g., oil at USD 69.2/barrel). However, reserve growth (USD 6,194.4 million) and fiscal surplus (TZS 403.4 billion) provide buffers. Compared to 2024’s 4.2% GDP deficit projection, the 3.8% estimate reflects progress, outperforming peers like Uganda (5% deficit).
• Future Outlook: Sustained tourism growth (3.8%) and logistics expansion (13.8%) could further narrow the deficit, but managing import costs (21.2%) and diversifying exports beyond services are critical for long-term stability.