After a slump, Tanzania’s economy to grow in 2010

Economic experts predict a real GDP growth of 5.7 per cent in Tanzania this year, compared with 5.0 per cent last year.

The Treasury also seeks to drive down the annual inflation rate to 6.0 per cent by June this year, from 12.2 per cent recorded last year.

Bank of Tanzania Governor Prof Benno Ndullu explained that the country recorded strong economic performance in 2008, with real GDP growing at 7.4 per cent, despite the global financial crunch.

The macroeconomic outlook for the period 2009/10 – 2011/12 shows that real GDP slowed down to 5.0 per cent in 2009 and began to recover in 2010.

Several indicators of economic activity during the first two quarters of 2009 suggest that although the global financial crisis affected growth, it impacted less on developing economies, compared with advanced and middle income economies.

Prof Ndullu, in a Monetary Policy Statement released last week, attributed this to good performance in traditional exports, cement production and the manufacturing industry.

Traditional exports increased to $470.8 million last year, from $418.4 million in 2008, as the agricultural sector recorded a bumper harvest, while cement production increased by 7.4 per cent in the first three quarters of 2009, to 1.38 million tonnes, compared with 1.28 million tonnes recorded during a similar period in 2008.

This suggests a strong performance in the construction industry.

Likewise, the production index in the manufacturing industry for the first three quarters of 2009 increased by 27.3 per cent compared with the corresponding period in 2008.

Higher production was recorded in food, beverages and tobacco; paper and paper products; non-metallic products; basic metal products and fabricated metal products.

On the other hand, non-food inflation remained relatively low, averaging 4.3 per cent, partly due to the decline in world commodity prices, while food inflation remained high, averaging 17.1 per cent, as shortages continued to be felt in parts of Tanzania and its neighbours.

A rise in non-food inflation towards the end of last year was mainly attributed to rising fuel prices, with the cost of crude oil doubling from $36 per barrel in December 2008 to $73 per barrel in last year.

However, signs of improved food supply have began to emerge, which translates into a decrease in inflation in the coming months.

According to the Minister of Agriculture, Food Security and Cooperatives, Stephen Wassira, an assessment on food supply revealed that between November last year and January this year, about two million people in more than 60 districts in the country were faced with serious food shortages and required relief amounting to 56,746 tonnes of grains.

By the end of December, the government had distributed 37,051 tons of grain to these regions.