Tanzania's central bank said on Tuesday it expects economic growth to accelerate to 7.4 per cent in 2017 from an estimated 7.2 per cent this year, driven by construction, communications and finance.

The Tanzanian economy, East Africa's second-biggest, grew 7 per cent last year.

"The macroeconomic objectives of the government aim at achieving a real gross domestic product growth of 7.3 per cent in 2016/17 based on the projected growth of 7.2 per cent in 2016 and 7.4 per cent in 2017, while maintaining inflation at single digits," the Bank of Tanzania said in its latest monetary policy statement.

"The bank will continue pursuing prudent monetary policy in 2016/17 to keep inflation close to the medium-term target of 5 per cent, while ensuring that the liquidity level is consistent with demands of various economic activities."

Tanzania's year-on-year headline inflation rate edged up to 5.2 per cent in May from 5.1 per cent in April, as prices rose for non-food items.

The government said it plans to increase spending by 31 per cent in its 2016/17 fiscal year to $13.51 billion to finance infrastructure and industrial projects.