Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Tanzania has experienced strong growth in recent years, with an average growth of 6.3% in the last decade, thanks to a high level of exports in natural resources, developments in the tertiary sector (telecommunications, transportation, finance, tourism) and the establishment of a liberalisation programme. Although GDP growth decelerated since the outbreak of the COVID-19 pandemic, Tanzania was one of the rare economies not to fall into economic recession, thanks to gold exports and only light health restrictions. In 2021, the real GDP of the country grew by 4.9% reaching USD 70.28 billion according to the Bank of Tanzania; while in 2022 growth was estimated at 4.5% supported by public and private investment (mostly in infrastructure projects). For 2023, the IMF forecasts a GDP growth of 5.2%, followed by 6.2% in 2024, closer to the country’s pre-pandemic average. Downside risks include weak fiscal metrics, elevated debt stocks and the ongoing effects of the Russian-Ukraine war (the two countries accounted for 11% of tourist arrivals before the conflict).

In 2021-2022, the public deficit stayed elevated due to spending associated with the Socio-Economic Response and Recovery Plan. However, in 2022-2023, it is set to rise again due to social and development expenses. To alleviate the impact of inflation on consumers, the government has declared fuel and fertiliser subsidies. Additionally, healthcare spending related to COVID-19 will likely continue to be substantial until 2024. Despite the financing of infrastructure projects, the country’s debt-to-GDP ratio decreased marginally in 2022 (to 39.5%, from 40.7% one year earlier), and is expected to follow a downward trend over the forecast horizon, while debt service should increase. Concessional loans from multilateral and bilateral partners constitute approximately 71% of the overall public debt, while the remaining portion is primarily held domestically by commercial banks and pension funds. Foreign exchange reserves were estimated at 4.5 months of imports at end-June 2022. In 2022, inflation was driven to its highest level since 2017 by increasing the costs of imported goods and commodity prices, reaching 4%. Nonetheless, inflation remained below the central bank's 5% objective, and the elimination of the mobile money tax is expected to augment household purchasing power. The IMF forecast a rise in inflation in 2023 to 5.3% due to continued high energy and food prices. Tanzania’s priorities include enhancing social safety nets and improving transparency, public resource management and administration. The government has adopted an ambitious development plan (Tanzania Development Vision 2025) focused on supporting the private sector, industrialization and the creation of jobs. It aims to improve the business climate by upgrading infrastructure, facilitating access to finance and advancing the level of education. Zanzibar also revealed a five-year USD 2 billion plan to diversify away from the tourism industry (Focus Economics). Long-standing structural problems include mismanagement of public finances and an underdeveloped legal framework that undermines the effectiveness of regulation. In addition, the country remains heavily dependent on foreign aid, with almost a third of its budget coming from international aid.

The poverty rate, which was as high as 60% in 2007, was estimated at 26.4% as per the World Bank’s latest estimates. Poverty and income inequality remain high despite high economic growth. 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 shortage and poor distribution of health workers, poor access to essential medicines and poor infrastructure. According to World Bank data, the unemployment rate was 2.5% in 2021 (latest data available), while the country’s GDP per capita (PPP) was estimated at USD 3,374 by the IMF (2022 data).

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