Tanzania Trade Deficit Widens in October 2018: Gold Down, Tourism Up

Tanzania Trade Balance Current Account

The latest Bank of Tanzania (BOT) Monthly Economic Review indicates that the country’s overall balance of payments recorded a deficit of USD 171.6 million in the year ending October 2018 compared to a surplus of USD 1,601.8 million in the year to October 2017, partly on account of widening of the current account deficit.

The current account balance was a deficit of USD 2,113.6 million compared with a deficit of USD 1,394.2 million in the year ending October 2017, largely explained by increase in imports, particularly transport equipment, and building and construction materials.

EXPORTS

Exports of goods and services increased to USD 8,742.0 million in the year ending October 2018 from USD 8,638.9 million in the corresponding period in 2017, supported by good performance of traditional goods exports and increase in service receipts.

The value of traditional goods exports rose by 38.4 percent to USD 1,115.1 million following an increase in export values of all traditional crops, save for coffee and tea.

The increase in export value of cotton, sisal, tobacco and cloves was on account of volume, while for cashew nuts was due to both volume and export price.

The decline in export value of coffee and tea was mostly due to a fall in export prices.

Non-traditional exports value dropped to USD 3,200.4 million in the year ending October 2018 from USD 3,575.9 million.

All categories of nontraditional goods exports recorded declines during the year, save for horticultural products.

It is worth noting that the decrease in export value of gold—the leading nontraditional good—was on account of a decline in volume.

Foreign exchange earnings from services amounted to USD 3,994.9 million in the year ending October 2018 compared with USD 3,819.0 million in the year ending October 2017, driven by travel and transport receipts.

Travel receipts, which is dominated by tourism, rose by 7.3 percent to USD 2,406.1 million owing to increase in number of tourist arrivals.

RELATED:  Tanzania Tourism Revenues Up +13.6% in Year End June 2018

Transport receipts went up by 10.9 percent to USD 1,237.7 million on account of increase in the volume of transit goods to-andfrom neighbouring countries particularly Zambia, Democratic Republic of the Congo and Burundi, following improvement of operations at the Dar es Salaam port, including removal of value added tax on auxiliary services of transit cargo and reduced road blocks.

IMPORTS

Goods and services import bill increased by 8.8 percent from the amount paid in the year ending October 2017 to USD 10,357.4 million in the year ending October 2018.

Goods import amounted to USD 8,143.3 million compared with USD 7,528.5 million in the year to October 2017, with all the import categories recording increases.

A notable increase was observed in capital and intermediate goods that is much associated with the ongoing infrastructural development projects, including construction of standard gauge railway, roads and bridges, airports, and ports.

Meanwhile, the rise in intermediate goods import bill was largely explained by an increase in the value of oil imports.

Oil imports—the second largest in goods imports—went up by 3.4 percent to USD 1,916.8 million following increase in both volume and price, consistent with global market price developments.

By contrast, importation of food and food stuff substantially declined in the year ending October 2018 on account of adequate supply of food across the country following good harvest during 2017/18 food crop-season.

Services payment increased to USD 2,214.1 million in the year to October 2018 from USD 1,988.0 million in the previous year, largely following increase in transport and other business services payments.

Payments with respect to transport, particularly freight, which accounted for the largest share of services payment, rose by 7.5 percent in line with increase in goods imports.