Tanzania: Country Outlook

Strategic Insights -

Tanzania is expected to experience a stable political environment over the next few years, thanks to the leadership of President Samia Suluhu Hassan and the ruling Chama Cha Mapinduzi (CCM) party's dominance of the political landscape. The government will focus on providing support to mitigate external and climate shocks to the economy, particularly through continued provision of fertiliser subsidies. In the long term, interventions will pivot away from subsidies to building economic resilience through climate-change mitigation and adaptation, especially in the vulnerable sectors of power and agriculture.

Key Takeaways:

  • The CCM party is expected to deliver another strong electoral performance in the 2024 local government elections and the 2025 presidential election, with President Samia Suluhu Hassan seeking and securing re-election.
  • The government will focus on providing support to mitigate external and climate shocks to the economy, particularly through continued provision of fertiliser subsidies in fiscal year 2024/25.
  • Interventions will pivot away from subsidies to building economic resilience through climate-change mitigation and adaptation, especially in the vulnerable sectors of power and agriculture.
  • Tanzania will continue to rely primarily on concessional debt to finance shortfalls in the balance of payments, but gradual improvements in the business environment and growing inbound investment will support economic growth.
  • Real GDP growth will accelerate in 2024-28, to an annual average of 5.9% in 2024-26 and 6.7% in 2027-28, driven by the East African Crude Oil Pipeline (EACOP) and foreign investment.
  • Inflation is expected to remain low, averaging 3.5% in 2024, and rising to 4.2% in 2027-28 as growth quickens.
  • The Tanzanian shilling is expected to weaken further, driven by a widening current-account deficit and US dollar shortages.
  • Implications of climate change, such as El Niño-induced rainfall, could lead to food price increases and a slight uptick in inflation in 2025.

Statistics:

  • Real GDP growth: 5.9% (2024-26) and 6.7% (2027-28)
  • Inflation: 3.5% (2024) and 4.2% (2027-28)
  • Current-account deficit/GDP ratio: 3.9% (average for 2024-26)
  • Widening current-account deficit: 3.9% (2024-26) and shrinking to 3.8% (2028)
  • Fertiliser subsidies: continuing to 2024/25
  • East African Crude Oil Pipeline (EACOP) investment: driving growth and foreign investment
  • Concessional debt: relying primarily on concessional debt to finance shortfalls in the balance of payments

Sources:

  • EIU (2024): Tanzania: Country Outlook
  • World Bank (2024): Tanzania Overview
  • International Monetary Fund (2024): Tanzania: Article IV Consultation and Request for a Staff-Monitored Program