/ 12 June 2008

Tanzania economic growth to rise steadily

Tanzania is expected to increase its rate of economic growth this year from last year's 7,3% and to get inflation below the average 2007 level of 7% by mid-2009.

Tanzania is expected to increase its rate of economic growth this year from last year’s 7,3% and to get inflation below the average 2007 level of 7% by mid-2009, the finance minister said on Thursday.

In an economic survey presented to Parliament ahead of his 2008/09 fiscal budget speech, Mustafa Mkulo predicted the rate of growth would rise steadily in each year up to 2011.

”The economy will grow by 7,8% in 2008, 8,1% in 2009, 8,8% in 2010 and 9,2% in 2011,” he said in the survey.

Mkulo said the East African country’s GDP grew 7,1% in 2007, compared with 6,7% in 2006, led by telecommunications, financial services and construction.

”Inflation will be kept below 7% by the end of June 2009,” he said. Average inflation in 2007 was 7%.

Mkulo’s forecast comes at a time when high food and oil prices are eating into economies worldwide, and this could be a challenge to growth as it fuels high inflation.

”We expect inflation to stay above 5% largely due to high global oil prices,” he said.

The government had targeted average inflation at below 4,5% by the end of the current fiscal year. It will be at 7% in 2008/09, Mkulo said, adding that average inflation stood at 7% in 2007, compared with 7,3% in 2006.

Annual inflation stood at 9,7% in April, up slightly from 9% in March and 6,1% last April, according to figures from the National Bureau of Statistics.

The country’s economy largely relies on agriculture, mining and tourism. Viewed favourably for its relative political stability, it is also increasingly attracting investments into financial services and telecoms. – Reuters 2008