Tanzania: Economic and Political Overview
Tanzania is a lower-middle-income country with a relatively diversified economy. It achieved remarkable progress in economic growth over the past two decades, with an average annual GDP growth rate surpassing 5%, thanks to a high level of exports in natural resources, developments in the tertiary sector (telecommunications, transportation, finance, tourism), and the establishment of a liberalization program. After growing by 5.1% in 2023, Tanzania saw accelerated growth in 2024, with real GDP expanding by 5.5% driven by rising exports, a strong agricultural season, and improved electricity supply. Increased global demand for Tanzanian goods such as gold, tourism services, and agricultural products also boosted the country's terms of trade. The country’s economic outlook remains favourable, with a 6% growth forecast for 2025, but risks are tilted to the downside. External risks include a potential global economic slowdown, geoeconomic fragmentation, escalating conflict in the DR Congo, and reduced foreign development assistance. Domestically, the upcoming national elections could lead to fiscal pressures and a slowdown in reforms (IMF).
According to the IMF, fiscal consolidation in Tanzania is expected to pause in FY24/25 following a supplementary budget adopted in February 2025, which increases public spending by about 0.4% of GDP, mainly for education, health, domestic arrears, and other priorities. To maintain debt sustainability, growth-friendly fiscal consolidation should resume in FY25/26, with plans to reduce the domestic primary deficit by 0.4 percentage points to 0.8% of GDP through revenue measures worth 0.9% of GDP, while protecting priority social spending at 7.1% of GDP. Meanwhile, Tanzania’s national debt rose to TZS 97.35 trillion as of June 30, 2024, up by TZS 15.1 trillion (18.36%) from the previous year’s TZS 82.25 trillion, according to the Controller and Auditor General. The debt consists of TZS 31.95 trillion in domestic debt and TZS 65.40 trillion in external debt. Despite the increase, the government considers the debt sustainable based on key economic indicators. The current account deficit narrowed to 2.6% of GDP in 2024 from 3.8% in 2023, supported by strong mineral and agricultural exports and record tourist arrivals, while imports rose moderately. High gold prices are expected to sustain export growth and further reduce the deficit in 2025. Gross international reserves reached USD 5.7 billion (about 3.8 months of imports) in March 2025. Tanzania’s inflation rate has declined steadily over the past decade, from a peak of 16% in 2012 to a low of 3.1% in 2024 (was 3.8% one year earlier). In April 2025, the IMF concluded discussions that, pending final approval, would release approximately USD 440.8 million in financial assistance. This would bring the total IMF support to USD 907.4 million under the Extended Credit Facility (ECF) and USD 343.6 million under the Resilience and Sustainability Facility (RSF). The IMF emphasizes that achieving Tanzania Vision 2050’s goals requires investing in education and health for a growing population, as well as fostering private sector-led growth and job creation. Key structural reforms include improving access to finance, simplifying business regulations, and strengthening judicial and anti-corruption institutions.
Poverty and income inequality remain high despite high economic growth: poverty at the international poverty line of USD2.15 (2017 PPP) per day is estimated to have decreased to 42.9% in 2024 as per the World Bank. Real per capita growth of 2 to 3% is expected to lower the poverty rate to 41.0% by 2027; however, there is a downside risk to global economic growth due to U.S. tariffs. This growth is primarily driven by the service and industry sectors, with less contribution from agriculture. The country also has a high HIV/AIDS rate and many people lack access to basic services (water, electricity, and healthcare). Additionally, the quality of primary health care has been negatively affected by a range of factors, including a shortage and poor distribution of health workers, inadequate access to essential medicines, and poor infrastructure. According to World Bank data, the unemployment rate was 2.6% in 2024, while the country’s GDP per capita (PPP) was estimated at USD 4,135.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 79.14 | 79.87 | 85.48 | 92.98 | 101.80 |
| GDP (Constant Prices, Annual % Change) | 5.1 | 5.4 | 6.0 | 6.3 | 6.5 |
| GDP per Capita (USD) | 1,249 | 1,224 | 1,272 | 1,344 | 1,429 |
| General Government Gross Debt (in % of GDP) | 46.9 | 47.3 | 46.3 | 45.0 | 43.6 |
| Inflation Rate (%) | 3.8 | 3.2 | 4.0 | 4.0 | 4.0 |
| Current Account (billions USD) | -4.19 | -3.14 | -2.91 | -2.95 | -2.88 |
| Current Account (in % of GDP) | -5.3 | -3.9 | -3.4 | -3.2 | -2.8 |
Source: IMF – World Economic Outlook Database, October 2021
Tanzania has a vast natural resource wealth, with significant reserves of gold, diamond, iron, coal, nickel, tanzanite, uranium, tin, phosphates, gemstones, and natural gas. Even though only about 15.2% of the land is arable, agriculture is the backbone of the Tanzanian economy: it employs around two-thirds of the workforce (65.4%) and accounts for 23.7% of the country's GDP, although the sector's contribution to the economy has been declining gradually (World Bank, latest data available). Tanzania's main crops are tobacco, coffee, cashew nuts, tea, cloves, cotton, and sisal plants. Due to its diverse climatic and geographic zones, Tanzania has one of the widest crop varieties in Africa. Livestock production, especially cattle and sheep, is another important component of the primary sector and the country has the second-largest cattle population in Africa after Ethiopia. Cereal production in 2024 was projected at a record 13.9 million tonnes, approximately 22% higher than the average output recorded in 2023 (FAO).
Industry accounts for 28% of GDP and employs around 8.4% of the workforce. Manufacturing makes up more than half of the secondary sector, followed by processing (around 40%) and assembling industries (less than 5%). The manufacturing sector is largely centred on the processing of agricultural products and is estimated to account for 8% of GDP. Tanzania is rich in minerals such as gold, diamonds, tanzanite, and other precious stones. The mining sector is a significant contributor to the country's economy, accounting for approximately 9.1%% of GDP (data Ministry of Minerals). The construction sector has been progressively contributing to the national economy, with increasing infrastructure and real estate projects. Tanzania has vast potential for hydroelectric power and natural gas, which can be used to produce electricity. The energy sector is growing, and the government is investing in projects to increase the country's energy production. According to the Bank of Tanzania, in the year to November 2024, manufactured goods have overtaken cloves as Zanzibar’s top export for the first time, earning USD 21.8 million, up nearly 91% from USD 11.4 million the year before.
Services account for 28.7% of GDP and employ 26.2% of the total workforce. Transport and storage, financial and insurance activities, and information and communication are the fastest-growing sectors. Tourism is another important component of the tertiary sector as Tanzania has one of the richest and most diverse wildlife in Africa. It contributes to around 10% of the GDP and 10% of employment. Tourism and trade were particularly impacted by the COVID-19 pandemic; nevertheless, Tanzania has received over 1.8 million tourists between 2021 and 2023, earning about USD 3.37 billion (official governmental figures). Moreover, the Tanzania National Business Council (TNBC) forecast that the share of tourism in the country’s GDP will reach 19.5% in 2025/26. The 2024 year showed positive results as Tanzania attracted a record 5.36 million tourists. As of March 2024, Tanzania had 48 licensed banks, comprising 35 commercial banks, 5 community banks, 4 microfinance banks, 2 mortgage banks, and 2 development banks. Their combined total assets surged by 17.3% to TZS 46,159.5 billion in 2022 from TZS 39,346.3 billion in 2021 (data Invest Tanzania).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 65.4 | 8.4 | 26.2 |
| Value Added (in % of GDP) | 23.7 | 28.0 | 28.7 |
| Value Added (Annual % Change) | 3.1 | 4.8 | 6.6 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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