In its latest Monetary Policy Statement, Mid-Year Review, of February 2021 the Bank of Tanzania (BoT) projects that the country’s real GDP will grow by 5.5% in 2020 and 6.0% in 2021.
Despite the impact of the Covid-19 pandemic on some sectors of the economy, particularly tourism, hotels and accommodation, and transport, the economy is expected to perform satisfactorily in 2020 and 2021.
The positive outlook is driven by expected value-added in agriculture due to adequate rains, public investment, increase in export earnings from mining contributed by high world market prices of gold, and private sector investment, coupled with supportive monetary and fiscal policies.
The measures implemented to improve the business environment and reform programs are also expected to add impetus to the growth momentum.
In Zanzibar, the economy is projected to recover to around 5%, as tourism-related activities progressively resumed due to the relaxation of lockdown measures in many countries and the implementation of development blueprints.
Tanzania Inflation in 2021
Inflation is projected to remain low in Tanzania Mainland, in the range of 3.0% to 5.0% in the remainder of 2020/21, as earlier projected in June 2020.
The projection is underpinned by the adequate food supply, anticipated low global oil prices, and stability of exchange rate.
Sustained prudence in the implementation of monetary and fiscal policies will contribute in maintaining low inflation as well.
In Zanzibar, inflation is also expected to remain low, below the medium-term target of 5.0%, due to improvement in the supply chain following the gradual lifting of lockdowns by countries.