Head of Regional Research, Africa for Standard Chartered Bank Ms Razia Khan presented on January 31st 2013 in Dar es Salaam the bank’s latest Global Research Briefing.
The presentation included both global and Tanzania’s economic outlook.
According to the bank, significant energy-sector developments will support Tanzania’s growth, both in 2013 and over the medium term, driven by the discoveries of large natural gas reserves off the coast of Tanzania, estimated at 28.9 trillion cubic feet.
Continued growth in agriculture, investment in other infrastructure, and a successful cotton crop should also support the economic outlook, driving trend growth of around 7%.
Receipts from tourism, gold and manufactured goods are all expected to rise. However, high imports of capital goods, which are required to sustain strong investment, will keep the current account deficit in double digits as a percentage of the country’s Gross Domestic Product (GDP).
Inflation in Tanzania which has proven to be stickier than in other East African Economies is likely to remain in single digits for much of 2013.
On financial issues, following the receipt of a single-B bond rating in 2011, the country has not yet opened its domestic market fully to offshore investor participation.
Nonetheless Tanzania intends to raise funds for infrastructure development by issuing Eurobonds, as previously reported by TanzaniaInvest.com.
Given the country’s public debt ratio of 41% of GDP and strong growth prospects, Standard Chartered believes the Eurobond is likely to be favourably received.
On the forex front the Tanzanian Shilling (TZS) remains stable, supported by regulatory controls and increased gas-related Foreign Direct Investment (FDI).
But with a significant current account deficit, some exchange rate adjustment is likely to be needed over time.
Standard Chartered Bank provides regular monthly and ad-hoc time-based publications on African economies and markets.
Tanzania is included in the Bank’s ‘7% Club’ – a list of countries with GDP growth strong enough to make the economy doubles in a decade.
According to estimates from the World Bank, Tanzania will be the 13th most populated country in the world by 2050 with 138 Million and the 5th most populated by 2100 with 450 Million.