Tanzania's growth prospects are bright in 2016 and 2017, supported by robust infrastructure investment and stronger household spending. While increased taxes on the tourism and telecoms sectors will offer some headwinds, we nevertheless single out Tanzania as a growth outperformer in the next two years.
Tanzania's current account deficit will widen as fuel prices rise and major infrastructure projects ramp up, prompting a sharp increase in capital goods imports. However, robust investment will keep Tanzania's external position strong.
A wide-reaching programme of infrastructure development will keep Tanzania's fiscal balance in deficit for the next decade. However, authorities are making long-term efforts to broaden the tax base and gas production will come online in 2020, bolstering the outlook for revenue collection.
The Magufuli government's implementation of tax and regulatory reform has been too rapid and forceful for many businesses. If sustained, the pattern of sudden policy shifts could damage Tanzania's attractiveness for many businesses. Meanwhile, despite the president's popularity, the government's crackdown on opposition will cause short-term political and social instability.
|e/f=BMI estimate/forecast. Source: BMI, TBoS, BoT, UN|
|Nominal GDP, USDbn||47.9||44.6||44.5||47.1|
|Real GDP growth, % y-o-y||7.0||7.0||6.8||6.7|
|Consumer price inflation, % y-o-y, eop||4.8||6.8||5.0||6.0|
|Exchange rate TZS/USD, eop||1,733.00||2,149.33||2,229.93||2,341.43|
|Budget balance, % of GDP||-4.7||-3.1||-4.6||-4.0|
|Current account balance, % of GDP||-10.5||-7.4||-8.1||-8.3|
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