Tanzania’s economy to grow by 6%, Central Bank

Tanzania's economy is on track for growth, with the Central Bank expressing optimism about achieving the 2020 targets despite the challenges posed by the pandemic. The country had revised its growth targets from 6.9% to 5.5% last year, but recent indicators suggest a more positive outlook. Laurence Mlaqi, an Economic Analysis and Financial Consultant, sheds light on the current economic landscape and what to expect in the near future. During the first half of 2020, Tanzania's economy saw growth at a commendable rate of 4.9%, propelled by key sectors such as construction, agriculture, transport, and mining. The inflation rate was kept in check at around 3%, thanks to sufficient food production and low fuel prices. Additionally, the foreign reserves stood at a substantial $5 billion, covering approximately 5.6 months of import needs. Looking ahead, the Central Bank anticipates a growth of about 6% this year, surpassing the 5.5% recorded in the previous year. The projection is based on the country's decision not to enforce a lockdown, allowing businesses to operate as usual and facilitating export opportunities. Ongoing projects like the Standard Gauge Railway (SGR) are expected to further drive economic growth. Tanzania's accommodative monetary policy, characterized by measures such as increased credit access for the private sector and reduced lending rates, is set to continue. This approach is geared towards bolstering the economy and supporting businesses in their recovery efforts amidst the pandemic-induced challenges. The reduction in the current account deficit, down to $662 million from $1.3 billion as imports declined, is a positive trend expected to be sustained. The country aims to boost its exports further, contributing to a favorable balance of payment. Government interventions, including increased expenditure, will also play a role in maintaining economic stability. While several African countries have begun trading under the African Continental Free Trade Area agreement, Tanzania is yet to ratify the deal. The delay is attributed to a need for further assessment to ensure the country's best interests are met. With potential repercussions on tariff revenue, Tanzania is carefully evaluating its participation in the agreement. The gold sector in Tanzania has shown promise, with a significant 34% increase in earnings from gold exports in 2020. The introduction of one-stop centers for gold miners to sell their produce has streamlined operations and contributed to the sector's growth. The stability in the exchange rate has also been supported by the gold sector's performance, signaling further opportunities for expansion and economic contribution. In conclusion, Tanzania's economic prospects appear optimistic, with key sectors poised for growth and government policies aimed at sustaining positive momentum amidst global challenges. The Central Bank's confidence in reaching the 2020 targets reflects a commitment to economic stability and growth.