Tanzania Economic Outlook
The economy likely saw robust annual GDP growth in Q2, following a 5.6% expansion in Q1. Annual private sector credit growth remained robust in Q2, boding well for fixed investment. Additionally, lower price pressures in Q2 compared to Q1 likely supported household demand. From the external side, the strong annual increase in tourist arrivals and gold production in Q2 boded well for services and merchandise exports, respectively. Favorable weather also supported the output of the cash crops tea and cotton. In other news, in late August, the government announced that it would provide credit guarantee schemes to boost exports, with the aim of easing a shortage of U.S. dollars. Meanwhile, in September, Tanzania signed a USD 400 million agreement with the World Bank and African Development Bank to fund agriculture programs, promising to grow the sector in the next few years.
Inflation remained at July’s 3.3% in August, below the Bank of Tanzania’s 5.0% target, as lower food inflation was offset by higher inflation for transport, housing and electricity. In 2023, average inflation is set to remain around 2022 levels. A weaker-than-anticipated shilling is an upside risk, and the evolution of oil prices is a factor to watch.