ECONOMY OVERVIEW

As of 2024, Tanzania’s economy demonstrates resilience and potential for growth amidst various challenges. The country’s Gross Domestic Product (GDP) stands at approximately $65 billion (USD), reflecting its position as one of the largest economies in East Africa. With a nominal GDP per capita of around $1,300 (USD), Tanzania faces the task of addressing income disparities and improving living standards for its population.

Tanzania has experienced moderate inflation rates in recent years, typically ranging between 4% to 6%. This relatively stable inflation environment contributes to economic predictability and consumer confidence. The exchange rate of the Tanzanian Shilling (TZS) against major currencies such as the USD is managed by the central bank, with fluctuations influenced by external factors such as global commodity prices and domestic economic conditions.

The government of Tanzania faces challenges related to managing public debt levels, which have risen in recent years due to infrastructure investments, fiscal deficits, and borrowing for development projects. Striking a balance between debt sustainability and financing essential public services and infrastructure remains a key priority for policymakers.

Unemployment is a significant concern in Tanzania, particularly among youth and rural populations. The unemployment rate is estimated to be around 10%, although underemployment and informal employment are widespread. Addressing unemployment requires targeted policies to promote job creation, skills development, and entrepreneurship, particularly in sectors such as agriculture, manufacturing, and services.

Foreign Direct Investment (FDI) inflows into Tanzania have been relatively stable, driven by investment in sectors such as mining, agriculture, telecommunications, and infrastructure. The government has implemented measures to improve the investment climate, including regulatory reforms, infrastructure development, and investment incentives, to attract foreign capital and stimulate economic growth.

Tanzania’s external trade is characterized by exports of agricultural products such as coffee, tea, tobacco, and cashew nuts, as well as natural resources including gold, diamonds, and minerals. Imports consist primarily of machinery, vehicles, petroleum products, and consumer goods. The country’s trade balance may fluctuate depending on global commodity prices, export volumes, and import demand.

Moreover, Tanzania’s Human Development Index (HDI) reflects progress in health, education, and living standards, although challenges persist, particularly in rural areas and among marginalized communities. The government has prioritized social development programs, including investments in education, healthcare, and poverty reduction, to improve human development outcomes and promote inclusive growth.

In summary, Tanzania’s economy faces various challenges, but also demonstrates significant potential for growth and development. Addressing structural constraints, enhancing economic diversification, and promoting inclusive policies are essential for Tanzania to realize its development aspirations and improve the well-being of its citizens.