AfricaPress-Tanzania: THE overall consumer demand for nonessential goods is expected to decrease due to economic uncertainty and supply shocks brought by coronavirus outbreak that are expected to limit stock in the retail sector.
The Deloitte report on the economic impact of the Covid-19 pandemic on East African economies’, estimated that private expenditure to fall to 1.9 per cent from 6.0 per cent of last year.
“Private expenditure is estimated to average 1.9 per cent of Gross Domestic Product (GDP) in 2020, down from a 6.0 per cent of GDP average registered in 2019.
The report, which was prepared before the central bank interventions to cut key rates, said the overall consumer demand to decrease especially for nonessential goods.
“Overall consumer demand is expected to decrease…due to economic uncertainty and supply shocks that are expected to limit stock in the retail sector,” the report projected.
The total household spending in Tanzania increased by 9.1 per cent in 2019, down from 10.2 per cent in 2018.
The overall, household expenditure constituted about 50.4 per cent (28.4 billion US dollars) of Tanzania’s GDP in 2019.
Due to the country’s low income levels, household spending on essential goods and services accounts for 80 per cent of total household spending.
The Confederation of Tanzania Industries (CTI) recently said in a report the pandemic showed almost 98 per cent of the respondents confirmed that their businesses have been affected by virus contagion.
The CTI report also pointed out that manufacturing sector envisage seeing sales revenue drop by 50 per cent.
Yesterday Bank of Tanzania (BoT) issued some measures to stimulate the economy amid the pandemic by touched five key areas; statutory minimum reserve for banks, discount rate, collateral value of government securities, loan payment structuring and mobile phone transaction amount.
Zan Securities Chief Executive Officer Raphael Masumbuko said the new measures in turn will lead to increased liquidity in the economy and help commercial banks and corporate borrowers.
“We expect a trickle-down effect of these measures to reach the general public through increased loans accessibility, availability of goods and services and reduced foreclosures due to loan defaults,” Mr Masumbuko said.
He also pointed out that the measures are unprecedented in “our country, which leads us to believe that the Bank of Tanzania has decided to leave no stone unturned in curbing the economic impact of the Covid-19 and we think our economy will navigate the pandemic just fine”.
Total household spending in the country increased by 9.1per cent last year down from 10.2 per cent in 2018.
Overall, household expenditure constituted about 50.4 per cent or 28.4 billion US dollars Tanzania’s GDP in 2019.
Due to the country’s low income levels, household spending on essential goods and services accounts for 80 per cent of total household spending.
An Economist-cum-investment banker, Dr Hildebrand Shayo, said the BoT statutory minimum ratio from 7.0 per cent to 6.0 per cent the move help to support business and consumer confidence at a prevailing difficult coronavirus time.
“Also it will bolster the cash flows of businesses and households, and importantly to reduce the cost, and to improve the availability of finance,” Dr Shayo said.
