Tanzania’s economic growth risks have remained moderate as per latest observations.
The Economy on the mainland Tanzania is expected to grow at the rate of 5.2 percent while that of Zanzibar isles to jump slightly higher at 7.2 percent in 2023, according to experts on monetary issues.
The Economic Research Center for the Tanzania Investment and Consultant Group Limited (TICGL) reports that the developments are underpinned by improved business conditions, banking sector profitability, liquidity available to fund firms, and governmental infrastructure investment.
The country’s Global growth fell to 4.4 percent in 2022 from 5.9 percent recorded in 2017, owing mostly to supply-chain disruptions. The trend has been carried forward to 2023.
The disruptions include the war between Russia and Ukraine, the previous COVID-19 pandemic and its cumulative impacts, tightening financial conditions, and climate-related constraints, all leading to high food and energy costs.
Due to prolonged tight financial conditions, the war in Eastern Europe and the cumulative impacts of the COVID-19 pandemic, the global economy is expected to rise by 3.8 percent in 2023.
However, despite foreign shocks, the domestic economy remained stable, with growth in Tanzania Mainland and Zanzibar ranging from 4.7 percent to 5.4 percent in 2022.
The revival of economic activity and continued governmental and private sector investment led to the growth.
Non-financial corporations’ financing sources strengthened, showing resurgences in business activity and increasing domestic and overseas demand.
With appropriate capital, liquidity, and low credit risks, the banking sub-sector maintained resiliency. With greater domestic investor engagement, financial and capital markets remained strong, stable, and robust.
The insurance subsector, according to the analysis, has also remained stable, with increased gross premiums and profitability, as well as appropriate capital and liquidity.
In both Tanzania Mainland and Zanzibar, the social security sub-sector also remained irrepressible, with improved assets and the ability to pay maturing liabilities.
The Economic Research Centre’s observation concludes that domestic economic risks have remained mild as a result of a sound macroeconomic environment, corporate activity recovery, and government policy initiatives.
Still, it points out that the domestic economy is vulnerable to tightened financial circumstances, climate-related threats, and the ongoing war in the Eastern Europe.
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