Executive Summary
Zanzibar's economy showed a mixed but broadly positive picture in June 2026. Headline inflation rose to 6.0 percent, from 4.1 percent a year earlier, driven by higher food prices and rising transport costs linked to fuel prices — food inflation alone reached 10.5 percent. On the fiscal side, domestic revenue and grants reached TZS 204.4 billion against a monthly target, while government spending of TZS 423.6 billion produced an overall fiscal deficit of TZS 219.2 billion, financed through domestic borrowing.
The external sector was the standout performer: Zanzibar's current account surplus grew 29.1 percent to USD 1,023.2 million in the year ending June 2026, driven overwhelmingly by tourism. Tourist arrivals rose 18.9 percent to 949,278, pushing service export receipts up 24.7 percent and cementing tourism as the backbone of Zanzibar's external earnings. Exports of goods and services grew 26.7 percent to USD 1,796.6 million, while imports grew 23.1 percent to USD 785.7 million.
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Read the Full Analysis →1. Inflation Developments
Zanzibar's headline inflation climbed to 6.0 percent in June 2026, from 4.1 percent a year earlier, largely on higher food prices and rising transport costs linked to elevated fuel prices. By contrast, non-food inflation actually eased to 2.5 percent (from 3.9 percent a year earlier), with moderation in clothing/footwear, personal care and miscellaneous goods and services.
| Measure | Jun-25 | May-26 | Jun-26 |
|---|---|---|---|
| Headline inflation | 4.1 | 5.5 | 6.0 |
| Food | 4.4 | 9.9 | 10.5 |
| Non-food | 3.9 | 2.1 | 2.5 |
Source: Office of the Chief Government Statistician (Table 3.1.1).
1.1 Inflation by Category, June 2026
| Category | Weight (%) | Jun-25 | May-26 | Jun-26 |
|---|---|---|---|---|
| Food and non-alcoholic beverages | 41.9 | 5.0 | 9.7 | 10.3 |
| Restaurants and accommodation services | 1.4 | 0.6 | 7.4 | 7.4 |
| Alcoholic beverages, tobacco and narcotics | 0.2 | -2.2 | 4.3 | 5.5 |
| Transport | 9.1 | 2.4 | 5.1 | 5.3 |
| Furnishings, household equipment & maintenance | 4.8 | 3.8 | 2.4 | 3.7 |
| Personal care, social protection & misc. | 1.7 | 4.8 | 0.8 | 0.8 |
| Health | 1.3 | 1.5 | 0.6 | 0.7 |
| Housing, water, electricity, gas & other fuels | 25.8 | 3.6 | 1.2 | 1.8 |
| Clothing and footwear | 6.3 | 5.0 | 1.6 | 1.4 |
| Education | 1.6 | 2.1 | 0.3 | 2.0 |
| Recreation, sport and culture | 1.1 | 5.1 | 2.6 | 2.0 |
| Information and communication | 4.2 | 2.8 | 0.1 | -0.6 |
| Insurance and financial services | 0.5 | 0.0 | 0.0 | 0.0 |
| All items (headline) | 100.0 | 4.1 | 5.5 | 6.0 |
Source: Office of the Chief Government Statistician (Table 3.1.1). Base: July 2022 = 100.
2. Government Budgetary Operations
In June 2026, Zanzibar's domestic revenue and grants reached TZS 204.4 billion, equivalent to 77.5 percent of the monthly target. Domestic revenue accounted for the largest share (86.6 percent), with the balance made up of grants. Tax collections reached TZS 160.1 billion (72.9 percent of target), with satisfactory performance in VAT and local excise duties, while non-tax revenue reached TZS 17 billion (78.2 percent of target).
| Item | 2025 Actual | 2026 Estimate | 2026 Actual |
|---|---|---|---|
| Tax on imports | 30.4 | 31.5 | 26.4 |
| VAT & excise duties (local) | 43.5 | 46.9 | 47.5 |
| Income tax | 49.0 | 61.3 | 50.2 |
| Other taxes | 39.2 | 80.0 | 36.0 |
| Non-tax revenue | 20.5 | 21.8 | 17.0 |
| Grants | 2.3 | 22.4 | 27.3 |
| Total resources | 184.9 | 263.9 | 204.4 |
Source: Ministry of Finance and Planning, Zanzibar (Chart 3.2.1). "Other taxes" include hotel/restaurant levies, tour operator levy, revenue stamps, airport/seaport charges, road development fund, and petroleum levy.
| Item | 2025 Actual | 2026 Estimate | 2026 Actual |
|---|---|---|---|
| Wages and salaries | 68.2 | 67.5 | 67.6 |
| Other recurrent expenditure | 92.6 | 55.1 | 41.1 |
| Development expenditure | 270.8 | 369.5 | 314.9 |
| Total expenditure | 431.6 | 492.1 | 423.6 |
Source: Ministry of Finance and Planning, Zanzibar (Chart 3.2.2). "Other recurrent expenditure" includes transfers, domestic debt interest, consolidated fund service and other charges.
3. External Sector Performance
Zanzibar's current account surplus grew 29.1 percent to USD 1,023.2 million in the year ending June 2026, from USD 792.4 million a year earlier — driven overwhelmingly by higher service receipts from tourism-related activities. The services account surplus reached USD 1,597.1 million (+24.5%), dwarfing the goods account deficit of USD 586.2 million.
| Item | 2025 | 2026 (provisional) | % Change |
|---|---|---|---|
| Goods account (net) | -503.9 | -586.2 | 16.3% |
| Services account (net) | 1,283.3 | 1,597.1 | 24.5% |
| Goods & services (net) | 779.4 | 1,010.9 | 29.7% |
| Primary income account (net) | 11.6 | 10.3 | -11.3% |
| Secondary income (net) | 1.4 | 2.0 | 44.6% |
| Current account balance | 792.4 | 1,023.2 | 29.1% |
Source: Tanzania Revenue Authority, banks, and Bank of Tanzania computations (Table 3.3.1).
3.1 Export Composition, Year Ending June 2026
Clove exports — Zanzibar's flagship traditional export — surged in value, more than doubling from a low base as unit prices rose 33.8 percent to USD 6,335.9 per tonne. Non-traditional exports (seaweed, manufactured goods, fish products) softened somewhat in value even as export volumes shifted, while "other exports" grew strongly.
| Item | 2025 | 2026 (provisional) | % Change |
|---|---|---|---|
| Clove (traditional export) | 3.45 | 44.58 | +1,192% |
| Seaweeds | 3.22 | 1.74 | -45.9% |
| Manufactured goods | 15.39 | 10.76 | -30.1% |
| Fish and fish products | 1.18 | 0.89 | -24.0% |
| Other exports | 10.05 | 12.49 | +24.2% |
| Grand total (goods exports) | 33.29 | 70.46 | +111.6% |
Source: Tanzania Revenue Authority and Bank of Tanzania computations (Table 3.3.2).
3.2 Import Composition, Year Ending June 2026
Import growth was broad-based across categories: capital goods imports more than doubled (led by machinery, mechanical appliances and industrial transport equipment), consumer goods imports rose 45.6 percent (soap and detergents, textiles, footwear), while intermediate goods imports were roughly flat overall as a 35.7 percent drop in fuel and lubricant imports offset a 48.5 percent rise in industrial supplies.
| Category | 2025 | 2026 (provisional) | % Change |
|---|---|---|---|
| Capital goods | 68.9 | 161.0 | +133.7% |
| Intermediate goods | 399.1 | 395.0 | -1.0% |
| of which: Industrial supplies | 123.2 | 183.0 | +48.5% |
| of which: Fuel and lubricants | 159.7 | 102.7 | -35.7% |
| Consumer goods | 69.1 | 100.6 | +45.6% |
| Total imports (f.o.b) | 537.2 | 656.7 | +22.2% |
Source: Tanzania Revenue Authority and Bank of Tanzania computations (Table 3.3.3).
4. Outlook
For the Mainland picture behind these numbers, see TICGL's companion analysis on the full Tanzania Economic Update for July 2026 and Tanzania's national debt position.
Muhtasari kwa Kiswahili
Frequently Asked Questions
What is Zanzibar's inflation rate in June 2026?
Zanzibar's headline inflation rose to 6.0 percent in June 2026, from 4.1 percent a year earlier, driven mainly by food prices (10.5 percent) and transport costs.
How is Zanzibar's government budget performing?
Domestic revenue and grants reached TZS 204.4 billion in June 2026 (77.5% of target), against expenditure of TZS 423.6 billion, resulting in a TZS 219.2 billion deficit financed by domestic borrowing.
How much did Zanzibar's current account surplus grow?
It grew 29.1 percent to USD 1,023.2 million in the year ending June 2026, from USD 792.4 million a year earlier, driven by tourism receipts.
How important is tourism to Zanzibar's economy?
Tourist arrivals grew 18.9 percent to 949,278, and tourism is the dominant driver of Zanzibar's services account surplus and overall current account strength.
What does Zanzibar mainly export and import?
Exports are led by cloves and non-traditional exports (seaweed, manufactured goods, fish). Imports are dominated by intermediate goods, followed by capital and consumer goods.