Economic studies
Tanzania, United Republic of

Tanzania, United Republic of

Population 59.7 million
GDP per capita 1,177 US$
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major macro economic indicators

  2020 2021 2022 (e) 2023 (p)
GDP growth (%)* 4.8 4.9 4.8 4.5
Inflation (yearly average, %)* 3.3 3.7 4.3 4.2
Budget balance (% GDP)* ** -1.9 -3.9 -2.8 -3.3
Current account balance (% GDP)* -1.8 -1.9 -4.5 -4.3
Public debt (% GDP)* 38.0 39.7 42.2 42.1

(e): Estimate (f): Forecast *Fiscal year from 1st July 2022 - 30th June. 2023 data: FY22-23 **Grants included


  • Mining wealth (gold, copper)
  • Gas potential thanks to offshore reserves discovered in 2010
  • Tourism assets (national parks, coastline)
  • Regional cooperation strategy, accelerated integration into the East African Community (EAC) under President Samia Suluhu Hassan
  • International support in the form of concessional loans
  • Development of monetary policy instruments


  • High dependence on gold prices
  • Vulnerability of agriculture (29% of GDP and 65% of employment) to climatic conditions
  • Inadequate infrastructure, particularly in electricity and transport
  • Inconsistent industrial policy and poor business environment
  • Religious tensions between the Zanzibar archipelago and the mainland
  • Low level of human capital


Activity remains stimulated by numerous infrastructure projects

After proving rather resilient in the face of the COVID-19 pandemic, thanks to gold exports (40% of the total) and the authorities' refusal to impose major health restrictions, the economy now has to deal with the effects of the war in Ukraine, particularly on prices. However, although growth is expected to decelerate, it should remain strong thanks to public and private investment in ongoing and future infrastructure projects. For instance, the standard gauge railway project, which started in late 2019 and aims to link the country with Rwanda and Uganda into Burundi and the Democratic Republic of Congo, is expected to continue. Including this project, the 2022-2023 budget of the Ministry of Public Works and Transport anticipates the allocation of USD 1.7 billion to transport infrastructure development projects. This expenditure also includes the purchase of four new Boeing aircraft by Air Tanzania. The USD 30 billion offshore natural gas development and liquefaction project is expected to start in 2023, as part of the agreement signed with Shell (UK) and Equinor (Norway). However, the immediate impact on growth will be small, as the final investment decision is not expected before 2025. On the other hand, because of the war in Ukraine, the terms of trade are deteriorating, increasing the import bill. While imports will continue to be driven by capital goods required for infrastructure projects, rising fuel and food prices, as well as disruptions in the fertiliser and pesticide markets, will undermine the contribution of trade to growth. Moreover, tourism revenues, which were already struggling to recover their pre-crisis level, are expected to suffer from the reduction in tourist flows from Ukraine and Russia (11% of arrivals in 2021). In addition, rising bills for imported goods and commodity prices are fuelling inflation to its highest level since 2017, which will erode the contribution of private consumption. However, inflation is expected to remain below the central bank's 5% target, and household purchasing power will be boosted by the announced removal of the mobile money tax.


Twin deficits still large, sustainable public debt

The public deficit, which remained high in 2021-2022 due to expenditure linked to the Socio-Economic Response and Recovery Plan, will increase again in 2022-2023 on the back of social and development expenditure. To combat the impact of inflation on household purchasing power, the government has announced fuel and fertiliser subsidies. Furthermore, health expenditure linked to the fight against COVID-19 is expected to remain high until 2024. Finally, while partial debt service relief was granted in 2020-2021, debt service will increase in 2023. Public debt, which has increased by almost 15 percentage points of GDP since the early 2010s, due to the financing of infrastructure projects, is expected to stabilise in 2023. The risk of debt distress remains limited, as about 70% of the external share (approximately 71% of total public debt) is made up of concessional loans from multilateral and bilateral partners. Its domestic share is held mainly by commercial banks and pension funds.

Structurally in deficit due to Tanzania's dependence on imports, the current account is expected to continue to post a large (albeit slightly shrinking) deficit. Indeed, the deterioration in the terms of trade and the slow recovery in tourism receipts due to the war in Ukraine will continue to weigh on the trade deficit. However, continued strong exports of mining products, starting with gold, will mitigate this deterioration. The primary income account (mainly investment income) is in deficit, in particular because of the repatriation of corporate profits. This is only half offset by the surplus in the secondary income account, which is mainly fuelled by remittances from expatriates. The current account deficit will continue to be financed mainly by loans (concessional and non-concessional), foreign direct investment and project aid. Exceptional financing from the IMF (USD 1 billion loan under the Extended Fund Facility) and the World Bank will contribute to this. A new allocation of SDRs equivalent to USD 543 million in 2021 will supplement the foreign exchange reserves, which were still estimated at 4.5 months of imports at end-June 2022.


Efforts to ease the social climate and strengthen external relations

Reelected in October 2020 for a second five-year term with nearly 85% of the vote in a high-stakes election, John Magufuli died in March 2021. Vice President Samia Suluhu Hassan was sworn in as president to complete Magufuli's term (2025). On the domestic front, the President has taken steps to calm the social climate, starting with the abolition of the mobile money tax in September 2022. Introduced in 2021, this tax had provoked a wave of protests, leading the government to reduce it once. In addition, subsidies for fuel and fertiliser should also limit social discontent over price increases. Moreover, after years of fending off pressure from opposition parties and rights activists, the CCM has said that it is ready to reform the country's constitution. However, in the absence of a timetable, it seems unlikely that such a reform will materialise before the 2025 elections. A possible revision of the constitution could reawaken latent tensions over Zanzibar's status and the archipelago's desire for independence.

Externally, efforts to position the country as a regional trade hub (pipeline project with Uganda, strengthening the country's integration into the EAC, etc.) could strengthen ties with neighbouring countries. While the Kitaya attack (October 2020), near the border with Mozambique, signalled that insecurity linked to the Islamist insurgency in its neighbour could reach it, it also allowed for greater security cooperation between the two countries. After the DRC joined the EAC in March 2022, multilateral cooperation on regional security is expected to intensify in an attempt to contain the continuing instability there.


Last updated: November 2022

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