Economic Outline

Economic Indicators

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.

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