Tanzania Investment and Consultant Group Ltd

| Economic Research Centre

Tanzania's Export Led Economic Growth and Trade Dynamics
May 11, 2024  
Tanzania's Export-Led Economic Growth and Trade Dynamics In the year ending March 2024, exports of goods and services showed robust growth, rising by 13.6 percent to reach USD 14,301.4 million. This significant increase was primarily driven by various factors, including strong performances in traditional goods, particularly in exports of tobacco, coffee, cotton, and cashew nuts. […]

Tanzania's Export-Led Economic Growth and Trade Dynamics

In the year ending March 2024, exports of goods and services showed robust growth, rising by 13.6 percent to reach USD 14,301.4 million. This significant increase was primarily driven by various factors, including strong performances in traditional goods, particularly in exports of tobacco, coffee, cotton, and cashew nuts. These traditional goods exports saw a substantial increase from USD 758.4 million to USD 1,031 million. This growth can be attributed to both price and volume effects.

Non-traditional goods exports also saw a notable increase, rising by 1.3 percent to USD 6,286.7 million. The main contributors to this growth were gold, horticultural products, and oil seeds. Gold exports, in particular, stood out, amounting to USD 3,106.6 million, which accounted for nearly half of all non-traditional exports. The increase in horticultural product exports, driven by a rise in vegetable exports, especially melons and chickpeas, also played a significant role in this growth.

Service receipts, totaling USD 6,562.2 million, also saw a substantial increase from the previous year, driven mainly by travel and transportation receipts. The recovery of the tourism sector played a significant role in this increase, with tourist arrivals recording a notable annual increase of 21.9 percent to 1,919,447. This recovery is consistent with the global tourism industry trends. On a monthly basis, service receipts reached USD 542.3 million in March 2024, compared to USD 481 million in March 2023.

In contrast, imports of goods and services declined to USD 16,033.5 million in the year to March 2024 from USD 17,124.2 million in the corresponding year. This decline was mainly due to decreases in imports of refined white petroleum products, fertilizers, and industrial supplies. On a monthly basis, goods imports were USD 1,148.3 million in March 2024 compared to USD 1,170.7 million in March 2023.

Service payments also declined to USD 2,265.5 million compared with USD 2,578.6 million in the year ending March 2023. This decrease was primarily due to a decline in freight payments following a fall in imports.

The primary income account deficit widened to USD 1,504.4 million from USD 1,362.4 million recorded in the year to March 2023, mainly due to higher interest payments abroad. On a monthly basis, the primary account recorded a deficit of USD 108.4 million, higher than the deficit of USD 99.5 million in March 2023.

On a positive note, the secondary income account balance improved to a surplus of USD 652.9 million from a surplus of USD 612.8 million in the year ending March 2023. This improvement was primarily due to an increase in personal transfers. On a monthly basis, the secondary income account recorded a surplus balance of USD 45.2 million in March 2024, slightly lower than USD 50.4 million in a similar period in 2023.

Exports, imports, and Tanzania's economic growth:

  1. Export Growth: Tanzania experienced significant growth in exports of both goods and services, with a 13.6 percent increase in the year ending March 2024. This growth was driven by various factors, including strong performances in traditional goods such as tobacco, coffee, cotton, and cashew nuts, as well as non-traditional goods like gold, horticultural products, and oil seeds. Additionally, service receipts, particularly from travel and transportation, contributed to export growth.
  2. Import Decline: In contrast to export growth, imports of goods and services declined during the same period. This decline can be attributed to decreases in imports of refined white petroleum products, fertilizers, and industrial supplies. Lower imports of goods and services resulted in a decrease in overall spending on imports.
  3. Trade Balance: The combination of export growth and import decline suggests an improvement in Tanzania's trade balance. With exports outpacing imports, Tanzania likely experienced a reduction in its trade deficit, or possibly even achieved a trade surplus. A favorable trade balance is generally associated with economic growth as it indicates increased competitiveness and the ability to meet domestic demand while also generating revenue from exports.
  4. Sectoral Growth: The performance of specific sectors, such as agriculture (traditional goods) and mining (gold exports), played a significant role in driving export growth. This suggests that these sectors are contributing positively to Tanzania's economic expansion, potentially creating employment opportunities and stimulating further investment.
  5. Tourism Sector Recovery: The increase in service receipts, driven by a recovery in the tourism sector, indicates that Tanzania's efforts to revive tourism after the pandemic have been successful. This recovery not only boosts service exports but also has broader implications for the economy, including job creation and income generation.

Subscribe to TICGL Insights

Stay informed and gain the crucial information you need to make strategic decisions in Tanzania's vibrant market.
Subscription Form
crossmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram