Tanzania Economic Forecast

The external sector likely spearheaded growth in Q1. Tourist arrivals growth in January–February more than doubled from the same period in 2022; it came in at 50% year on year. Moreover, goods export growth skyrocketed in January, bringing Q1’s average growth markedly above that of Q4. Furthermore, price pressures softened slightly in Q1 from Q4. Additionally, although personal credit growth eased from Q4, it averaged over 22% year on year in Q1, which should have supported spending. That said, merchandise import growth more than halved to roughly 12% year on year in Q1 from Q4. In other news, the IMF concluded its Article IV consultation and the first review of the extended credit facility on 28 April; the Fund stated the reform program is advancing well, and about USD 153 million was disbursed for budget support.

Softer price increases for food, transport, and housing and utilities pushed inflation down to an 11-month low of 4.3% in April (March: 4.7%). On average, inflation will be higher this year than in 2022, but will hover around the Central Bank’s 5.0% target. A more dynamic economy and a weaker shilling will push inflation up.