In December 2024, Tanzania’s external sector showed resilience, with total exports rising by 9.8% to USD 14.72 billion, driven by gold (USD 3.49 billion, +4.3%) and tourism (USD 3.10 billion, +15.1%). Meanwhile, total imports increased by 7.2% to USD 17.85 billion, with petroleum imports (USD 4.08 billion, +10.2%) remaining the largest contributor to trade costs. As a result, the trade deficit narrowed to USD 3.13 billion, improving Tanzania’s external position. Foreign reserves stood at USD 5.5 billion, covering 4.5 months of imports, ensuring currency stability. To sustain this progress, Tanzania must diversify exports, attract more FDI (USD 1.83 billion, +8.2%), and reduce reliance on imported petroleum​

Tanzania’s external sector performance in December 2024 reflected strong export growth, increased foreign exchange inflows, and a narrowing trade deficit, supported by higher commodity prices and improved tourism earnings. However, import growth and external debt obligations remained key challenges.

1. Balance of Payments (BoP) and Foreign Reserves

• Tanzania’s overall balance of payments recorded a deficit of USD 135.6 million, an improvement from a deficit of USD 287.1 million in November 2024.
• Foreign exchange reserves stood at USD 5.5 billion, covering 4.5 months of imports, aligning with EAC and SADC benchmarks.

Implication:
✅ Higher reserves provide a cushion against external shocks and currency depreciation.
⚠️ A persistent BoP deficit means Tanzania still relies on external borrowing and capital inflows to maintain reserves.

2. Exports Performance

Tanzania’s total exports of goods and services increased by 9.8% to USD 14.72 billion in the year ending December 2024, compared to USD 13.41 billion in December 2023.

Key Export Categories

Key Observations:

✅ Tourism earnings (USD 3.10 billion, up 15.1%) indicate a full post-pandemic recovery, supported by increased international arrivals.
✅ Gold remains Tanzania’s top export (USD 3.49 billion, 23.7% of total exports), benefiting from strong global prices.
⚠️ The export base is still concentrated in commodities, increasing vulnerability to price fluctuations.

3. Imports Performance

• Total imports increased by 7.2% to USD 17.85 billion, compared to USD 16.65 billion in December 2023.
• The increase was driven by higher demand for capital goods and intermediate goods, reflecting economic expansion.

Key Import Categories

Key Observations:

✅ Increased imports of machinery (USD 2.81 billion, +9.5%) and raw materials (USD 2.45 billion, +6.8%) suggest industrial expansion.
⚠️ High petroleum import costs (USD 4.08 billion, +10.2%) increase trade deficit risks, making energy diversification crucial.

4. Trade Balance and Current Account Deficit

• The trade deficit narrowed to USD 3.13 billion from USD 3.24 billion in December 2023, supported by strong export growth.
• The current account deficit improved to USD 2.08 billion, down from USD 2.36 billion in December 2023, reflecting better export performance and remittance inflows.

Implication:
✅ Narrowing deficits indicate improved external stability, reducing pressure on foreign reserves.
⚠️ The trade deficit remains large, requiring further efforts to boost export diversification.

5. Foreign Direct Investment (FDI) and Capital Flows

• FDI inflows increased by 8.2% to USD 1.83 billion, up from USD 1.69 billion in December 2023, driven by mining, energy, and telecom sectors.
• Portfolio investment inflows rose to USD 594.7 million, indicating increased investor confidence.
• Remittances from Tanzanians abroad reached USD 589.2 million, up 6.3% year-on-year.

Implication:
✅ Higher FDI supports long-term economic growth, while increased remittances help stabilize the current account.
⚠️ Reliance on capital inflows means external shocks (e.g., global interest rate changes) could impact Tanzania’s financial position.

Key Takeaways:

📌 Exports grew by 9.8% (USD 14.72 billion), led by gold (USD 3.49 billion) and tourism (USD 3.10 billion), reducing the trade deficit.
📌 Imports increased by 7.2% (USD 17.85 billion), mainly in petroleum (USD 4.08 billion) and machinery (USD 2.81 billion), reflecting industrial growth.
📌 Foreign reserves remain strong at USD 5.5 billion (4.5 months of imports), supporting exchange rate stability.
📌 FDI inflows (USD 1.83 billion) and remittances (USD 589.2 million) improved, enhancing external financial stability.

To further strengthen external sector resilience, Tanzania should expand non-traditional exports, attract more FDI, and promote energy diversification to reduce petroleum import costs​

The external sector performance for December 2024 provides key insights into trade, foreign reserves, capital flows, and economic stability

1. Tanzania’s Export Growth is Strong, But Still Reliant on Commodities

• Total exports increased by 9.8% to USD 14.72 billion, led by gold (USD 3.49 billion, +4.3%) and tourism (USD 3.10 billion, +15.1%).
• Agricultural exports such as cashew nuts (USD 0.98 billion, +12.5%) and tobacco (USD 0.79 billion, +11.4%) performed well, benefiting from higher global commodity prices.
• Manufactured goods exports rose by 8.7%, reaching USD 1.92 billion, reflecting growth in Tanzania’s industrial sector.

Implication:
✅ Strong export growth helped narrow the trade deficit, reducing external vulnerabilities.
⚠️ The export base is still commodity-driven (gold, cashew nuts, tobacco), making Tanzania vulnerable to price fluctuations.
🔹 Tanzania must diversify its exports beyond raw commodities by increasing value addition (e.g., processed agricultural goods and finished manufactured products).

2. Imports Growth Reflects Economic Expansion, But High Energy Costs Are a Concern

• Total imports rose by 7.2% to USD 17.85 billion, mainly due to higher demand for capital goods, industrial raw materials, and petroleum products.
• Petroleum imports increased by 10.2% to USD 4.08 billion, making up the largest share of imports.
• Machinery & equipment imports grew by 9.5% (USD 2.81 billion), reflecting investments in industrial and infrastructure projects.

Implication:
✅ Higher imports of machinery and industrial inputs suggest economic expansion and manufacturing growth.
⚠️ Heavy dependence on petroleum imports increases trade deficit risks, highlighting the need for energy diversification (e.g., renewable energy investment).

3. Trade Deficit is Narrowing, Improving Tanzania’s External Position

• The trade deficit narrowed to USD 3.13 billion, down from USD 3.24 billion in December 2023, due to strong export performance.
• The current account deficit improved to USD 2.08 billion, reflecting higher remittances, FDI inflows, and strong services exports (tourism).

Implication:
✅ The narrowing trade and current account deficits indicate improved economic resilience and reduced pressure on foreign reserves.
⚠️ Tanzania must continue promoting exports and attracting FDI to sustain this positive trend.

4. Foreign Exchange Reserves Remain Stable, Supporting Currency Stability

• Foreign exchange reserves stood at USD 5.5 billion, covering 4.5 months of imports, meeting EAC and SADC benchmarks.

Implication:
✅ Adequate reserves ensure Tanzania can manage external shocks (e.g., exchange rate volatility, rising global interest rates).
⚠️ Sustaining reserve levels requires continued export growth and careful debt management.

5. Increased FDI and Capital Inflows Boost External Stability

• Foreign Direct Investment (FDI) inflows increased by 8.2% to USD 1.83 billion, mainly in mining, energy, and telecommunications.
• Portfolio investment inflows reached USD 594.7 million, reflecting increased investor confidence in Tanzania’s economy.
• Remittances from Tanzanians abroad rose to USD 589.2 million (+6.3%), providing additional foreign exchange inflows.

Implication:
✅ FDI growth supports economic expansion and job creation, while rising remittances strengthen household incomes.
⚠️ Tanzania must continue improving its investment climate to attract long-term capital flows.

Key Takeaways and Policy Actions Needed

📌 Exports grew by 9.8%, narrowing the trade deficit, but reliance on commodities remains a risk.
📌 Imports rose by 7.2%, mainly in petroleum and machinery, supporting industrial expansion but increasing energy dependence.
📌 Foreign reserves remain strong at USD 5.5 billion (4.5 months of import cover), stabilizing exchange rate risks.
📌 FDI and remittances increased, strengthening Tanzania’s external financial position.

🔹 What Needs to Be Done?
✅ Diversify export products and markets to reduce commodity reliance.
✅ Expand energy investments to reduce petroleum import costs.
✅ Strengthen policies to attract FDI in manufacturing, agribusiness, and technology.
✅ Boost domestic industries to reduce import dependence.

Overall, Tanzania’s external sector performance in December 2024 shows resilience, but efforts to strengthen export diversification and reduce reliance on external borrowing are crucial for long-term stability​