Poor agriculture, slower financial services hit 2016 Tanzanian growth

02.02.2017

Feb 1 Tanzania says its economy probably grew at a less speedy rate than it had hoped last year, slowed by poor-performing agriculture and less demand from its big trading partners.

In a presentation to parliament late on Tuesday, Finance and Planning Minister Philip Mpango said the 2016 growth projection was now 7.0 percent rather than the 7.2 percent given in September.

"A new assessment carried out by the government in collaboration with the International Monetary Fund (IMF) shows that the projected economic growth might not be achieved," he said.

Mpango said weaker-than-expected growth in some sectors in the first nine months of 2016 had undermined the economy.

He cited the agricultural sector, which he said grew by 2.1 percent in the first nine months of 2016, compared with a targeted growth rate of 2.6 percent.

By some calculations, agriculture accounts for around a quarter of the country's economic output.

The financial services sector, too, expanded at a slower-than-expected rate - 5.6 percent between January and September versus a previous projection of 7.6 percent, Mpango said.

"A slowdown in the economies of European Union countries and China, which are our big trade and investment partners, contributed to the downward revision of economic growth in the country," he said.

Mpango said Tanzania's full-year annual headline inflation rate declined to 5.2 percent last year from 5.6 percent in 2015 and was expected to remain within the government's mid-term target of 5 percent this year.

The IMF warned Tanzania in January that the country's economic policies threaten its forecast for growth in fiscal year 2016/17 (July-June) of around 7 percent.

After his election in 2015, President John Magufuli promised to reform the economy, which is hobbled by red tape and corruption. He said he would begin a programme to develop public infrastructure.

But the IMF said progress has been slow and that lagging public spending is squeezing liquidity and hurting economic growth.

Tanzania's economy grew 6.2 percent in the third quarter of 2016, compared with 7.3 percent in the same quarter of 2015.


reuters

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