The country’s real Gross Domestic Product (GDP) grew by 4.8 per cent, which was above the African average of 3.4 per cent, with the government projecting to accelerate the growth rate to 5.6 per cent in the next fiscal year.
The Minister for Finance and Planning, Dr Mwigulu Nchemba, said generally 32 out of 45 countries in sub-Saharan Africa experienced a negative economic growth, two economies stagnated while only eleven countries including Tanzania posted a positive growth.
“Despite the Covid-19 outbreak affecting the economies of many countries in the world, Tanzania is one of the few countries with positive economic growth by 2020,” Dr Nchemba told the August House when presenting the Economic Survey 2020 report and the National Development Plan for the 2021/2022 Financial Year yesterday.
The Finance Minister attributed the positive growth to the government’s decision to allow the citizens to continue performing their economic activities while adhering to health guidelines and precautions during the Covid-19 pandemic.
Tanzania witnessed a slowdown in GDP growth rate from 7.0per cent in 2019 to 4.8 per cent in 2020.
The slowdown in the economic growth was due to the impact of Covid-19 in Tanzania’s trading partners as well as floods which damaged transport infrastructure and delayed implementation of some development projects, said Dr Nchemba.
He said the impact of the Covid-19 pandemic was particularly evident in the economic activities of accommodation and food service as well as arts and entertainment which had negative growth in 2020.
“The sectors which recorded high growth rates in 2020 include: construction with 9.1 per cent, Information and Communication (8.4 per cent), Transport and Storage (8.4 per cent), Administrative and Support Services (7.8 percent), Professional, Scientific and Technical Activities (7.3 per cent); Mining and Quarrying (6.7 per cent); and Human Health and Social Work Activities (6.5 per cent),” the minister said.
He submitted that the GDP at current prices was 148.5tri/- in 2020 compared to 139.6tri/- in 2019. In addition, last year, Tanzania Mainland was projected to have a population of 55.9 million people compared to population of 54.2 million in 2019.
Thus, the average per capita GDP reached 2.65m/- (1,151 US dollars) in 2020 from 2.57m/-(1,118.9 US dollars) in 2019, which is an increase of 3.1 percent.
The minister said that inflation remained under the single digit range where it declined from an average of 3.4 per cent in 2019 to 3.3 per cent in 2020 and 3.3 per cent in April, this year.
“Inflation trends have remained relatively stable due to steady supply of food, falling oil prices on the international world market, stability of the shilling against the US dollar and other major convertible currencies as well as effective implementation of monetary and fiscal policies,” said the minister.
Dr Nchemba said the Bank of Tanzania (BoT) accommodative monetary policy managed to reduce interest rates in financial markets and in particular the lending and deposit rates.
Overall lending rates, yearon-year basis, decreased to 16.58 per cent to April, compared to an average of 16.91 per cent last year, while one-year lending rates decreased to an average of 16.05 per cent from 16.37 per cent.
The overall deposit rates were 6.95 per cent, slightly down from an average of 6.69 per cent registered in April while one-year deposit rates increased to an average of 8.77 per cent from 8.01 per cent.
The large portion of the total credit was directed to personal activities which accounted for 35.8 per cent, followed by business 15.7 per cent, manufacturing 10.1 percent and agriculture activities 8.0 per cent.
The extended broad money supply (M3) increased by 7.8 per cent, reaching 31tri/- in April compared to 28.76tri/-, last April. “The money supply continued to grow at a pace consistent with the demand for various economic activities,” Dr Nchemba said.
Also the current account recorded a deficit of 1.177bn US dollars compared to a deficit of 1.443bn US dollars, last April.
“The decrease was contributed by the increase of the value of exports of gold, horticultural products as well as decrease in import value of oil and transport equipment,” Dr Nchemba said.
The minister said foreign currency reserves have continued to remain at sufficient levels to meet the demand for imports of goods and services. As of April, foreign reserves were 4.97bn US dollars, sufficient to cover 5.8 months of imports of goods and services, said Dr Nchemba.
The East African Community threshold is 4.5 months. Tanzania reached an important milestone in July 2020, when it formally graduated from lowincome country to lower-middleincome country status.
Tanzania’s achievement reflects sustained macroeconomic stability that has supported growth, in addition to the country’s rich natural endowments and strategic geographic position.