Mainland Tanzania’s economy grew by 5.9% in 2025, slightly below the initial forecast of 6% and up from 5.5% in 2024, according to the Monetary Policy Report January 2026 recently released by the Bank of Tanzania (BoT).
The report provides the Bank’s assessment of recent macroeconomic developments, including GDP performance, inflation trends, and short-term projections.
Economic growth in Zanzibar is estimated at 6.8%, supported by construction, tourism, and manufacturing activities.
Credit to the private sector expanded by 20.3%, reflecting robust financing of productive economic activities across both Mainland Tanzania and Zanzibar.
GDP Growth
The economy was initially forecast to expand by 6% in 2025.
In the first half of the year, growth was strong, averaging 5.8%, supported by private and public investment, improvements in domestic policy implementation, and favourable external conditions.
The fourth quarter saw a slowdown, reflecting weaker performance in communication, transport, and tourism activities.
Strong growth in agriculture, mining and quarrying, construction, financial, and insurance services contributed the most to the annual GDP outturn.
Looking ahead, the Bank of Tanzania projects that growth in Mainland Tanzania will remain robust at around 6% in the first quarter of 2026 and accelerate to 6.1%, while Zanzibar is expected to expand by 7.2%.
The Market Perception and CEO Surveys conducted in December 2025 indicate favourable economic conditions and continued high growth in private sector credit.
The Bank assesses risks to the growth outlook as low, largely due to the wide diversification of economic activities across the economy.
Inflation
Inflation remained low and stable in 2025, fluctuating within the target range of 3–5%.
In the fourth quarter, inflation in Mainland Tanzania averaged 3.5%, while in Zanzibar it stood at 3.4%, supported by prudent monetary policy and favourable global conditions that eased pressure on the exchange rate and moderated imported inflation.
Inflationary pressures are expected to remain muted in 2026 due to favourable domestic conditions and a positive external environment, including low imported inflation.
In the first quarter of 2026, inflation is projected to remain low, underpinned by stable food prices resulting from expected good harvests, and adequate food stocks of more than 590,000 tonnes held by the National Food Reserve Agency and carry-over stocks held by private firms and households.
Prices of non-food consumer goods and services are expected to remain stable, while energy prices are projected to stay steady, supported by consistent electricity generation, moderate global oil prices, and a stable exchange rate.
The Market Perception and CEO Surveys conducted in December 2025 also indicate that the economy is expected to continue operating in a low-inflation environment.
Overall, the Bank of Tanzania projects inflation to remain well within the 3–5% target range in early 2026.
