World Bank —Tanzania’s vibrant development partner has predicted a slow down of the Tanzanian real Gross Domestic Product (GDP) to 2.5 per cent in 2020 from 6.9 per cent in 2019.
According to the fourteenth edition of the—Tanzania Economic Update Addressing the Impact of COVID-19, the bank analysis, based on assumptions of strengthened government action on containing the coronavirus pandemic and mitigating the economic impact, as well as improving external conditions, demonstrate real GDP growth slowing to 2.5 per cent in 2020, with substantial downside risk.
The bank’s analysis went further and adjoined the 2018 Household Budget Survey, and found out that, an additional 500,000 Tanzanians could fall below the poverty line, particularly those in urban areas relying on self-employment and informal/micro-enterprises.
However, as the entire globe and the region navigate through the pandemic, Tanzania sustained its consequences adding “economic costs are already being felt in Tanzania and even with additional policy actions to strengthen the health response and mitigate the economic effects, 2020 GDP growth will likely slow sharply.”
The bank noted that both crucial sectors to the economy, tourism and exports of manufacturing as well as agricultural goods have slowed down.
“In combination with direct labour market disruptions from the pandemic, this has caused a severe dampening of private domestic demand and deterioration of domestic business conditions. Falling public revenues confirms the broad dampening across the domestic economy. Point estimates for 2020 growth are highly uncertain and external demand and domestic business conditions over the coming months are very unclear,” the report argues.
Also, the World Bank argues that fiscal deficit and current account deficit are also both expected to broaden.
Hence, even though the bank’s forecasts that the impact of coronavirus will become less severe later in 2020, there is a serious risk of long-lasting negative spillovers on labour productivity.
Tanzania is one of the countries in Africa with a fast-growing economy.