Tanzania's economy grows 7.1 per cent in first half of 2014: minister - CNBC Africa

Tanzania's economy grows 7.1 per cent in first half of 2014: minister

East Africa

by Reuters 0

Tanzanian economy on the rise. PHOTO: Business Korea

This was slightly slower than its expansion in the same period of 2013, the government said on Thursday.

Africa's fourth-biggest gold producer, and a major tourist destination, forecasts economic growth of 7.2 per cent this year and maintained its forecasts for the next two years on Thursday.

“The economy is expected to expand further to 7.4 per cent in 2015 and 7.8 per cent in 2016," Stephen Wasira, minister of state in the president's office, said in a presentation to parliament.

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The government also plans to spend 5 777 trillion Tanzanian shillings (3.39 billion dollars) on development projects in fiscal 2015/16, the minister said in a separate report he submitted to parliament on Thursday.

Tanzania, a nation of 45 million people, is aiming to become a middle-income economy and Wasira said per capita income had risen to 706 dollars last year, from 600 dollars in 2012.

"We obviously need a much bigger push to become a lower middle-income economy with a per capita income of between 1 036 dollars and 4 085 dollars," he said.

Tourism has surged this year, with earnings from the sector rising 15 per cent in the year to August. The country is seen benefiting as neighbouring Kenya's appeal as a tourist destination has been dented by a number of attacks blamed on Somalia-based militants.

Tanzania's current account deficit, however, widened to 7.6 per cent of gross domestic product in the year to August, according to latest data, because the country received less aid and fewer loans this year and due to rising imports.

Financial support from China, though, is on the rise. The government announced last month 1.7 billion dollars in investment deals with China and 85 million dollars in grants and zero-interest loans from China, although it did not say what the money would be used for.

China's economic presence is growing in Tanzania, which has made major natural gas discoveries off its southern coast, and the new investment deals will include building a satellite city to ease congestion in the capital Dar es Salaam. China is also building a new port north of the capital.


Wasira on Thursday revised up growth for the first half of 2013 to 7.4 per cent, from 7.0 per cent.

He also said the consumer price index rose 6.4 per cent in the second quarter of this year, after a 6.1 per cent rise in the first quarter.

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Inflation inched down to 6.6 per cent in the year to September from 6.7 per cent in August. The government's objective is to maintain single-digit inflation in the medium term.

Tanzania plans to rebase its economy in mid-November, with analysts estimating the size of the economy could increase by about 20 per cent. Nigeria and Kenya have also recently rebased their economies to take structural changes into account.

Regarding the government plans to spend 5 777 trillion Tanzanian shillings on development projects in 2015/16, some 3 277 trillion shillings will come from government revenue while the balance will be sourced externally, according to the report submitted on Thursday.

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The government said last month it plans to issue its first Eurobond in 2015/16, which could be worth up to 1 billion dollars, to fund infrastructure projects after several years of delay in securing a credit rating.

The government's 2015/16 development plan said infrastructure investment would focus on railways, ports, airports, roads and the energy sector.