Tanzania Economic Update

Overview & Synopsis

Tanzania’s strong economic growth continues to outperform the regional average. Its economy grew at an estimated rate of 5.4 percent in 2024, higher than the Sub-Saharan African (SSA) average of 3.2 percent. The country has consolidated its post-COVID-19 recovery and is gradually closing the output gap against its long-run potential. Economic expansion has been broad-based, driven by increased household and government consumption, export growth, and rising investment from both the public and private sectors. Several factors have contributed to this economic momentum, including favorable export and import prices, a buoyant tourism sector, strong agricultural yields aided by favorable weather, and the commissioning of major infrastructure projects such as the Julius Nyerere Hydro Power Project (JNHPP) as well as the first segment of the Standard Gauge Railway (SGR), which connects the coast to inland regions. In 2024, improvements in macroeconomic management resulted in low inflation and strong fiscal revenues, enabling the government to deliver on its development agenda with reduced reliance on borrowing. Additionally, in the second half of the year, foreign exchange challenges eased.