According to the recently released World Bank Report entitled “Tanzania Economic Update; Stairways to Heaven,” the World Bank has forecasted approximately 6 percent growth in the Tanzania economy.
This forecast contradicts other reports such as the recently released macroeconomic country forecast report by the Netherland-based Currency Exchange Fund (TXC) that predicted that growth within the Tanzania economy will drop to three percent this year as a result of challenges such as inflationary pressures.
In response to the negative forecast, the government of Tanzania said that the TXC report was too pessimistic and that they remain confident that this year’s growth will not be significantly different than that of last year.
“The growth for the third quarter of last year was 6.4 percent,” said the Tanzania Minister of Finance Mustafa Mkulo, “This affirms to us that even this year we will see a real growth of 7.2 per cent.”
World Bank indeed also said that Tanzania’s economy could possibly reach 7 percent growth in 2012/13 if the global economy recovers, with gas revenues expected to boost domestic growth in the next decade.
Tanzania’s natural gas reserves are now estimated at more than 10 trillion cubic feet following major gas discoveries in the country’s deep-water offshore region.
While predicting growth, the World Bank nevertheless cautioned the Tanzania government against complacency saying that, while 6 or 7 percent was a good performance, it still represents the lowest rate achieved since the earlier part of 2000 and many Tanzanians are and will remain impoverished.
“Economic growth has failed to eradicate poverty, with one third of households still living below the poverty line,” said Mercy Tembon, the acting World Bank country director for Tanzania, Uganda and Burundi, “If Tanzania wants to reduce income gap between itself and middle income countries, it will have to grow faster and better.”
Dr. Tembon went on to indicate that the country could achieve its goal of accelerated and shared growth through combination of fiscal prudence, cost effective reforms in the education sector, and smart policies aimed at promoting the transformation of firms.
In addition, according to Jacques Morisset, the World Bank’s Lead Economist for Tanzania, after three years of rapid fiscal expansion, the country must find new methods of encouraging growth.
“The challenge is to create new impulse for growth through better education outcomes and skills,” said Mr. Morisset, “which will in turn sustain job creation and transformation of firms.”
Furthermore, Benno Ndulu, the Governor of the Bank of Tanzania, said that after reading the World Bank report, he saw many opportunities for Tanzania to attain its development goals.
“Report clearly shows that we are going to the storm for achieving higher pace of economic growth,” said Mr. Ndulu, “If we are well prepared, gas and oil economy is going to transform our economy.”