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Tanzania Business Forecast Report Q4 2014

  • September 2014
  • -
  • Business Monitor International
  • -
  • 44 pages

Core Views
We forecast real GDP growth of 7.0% in Tanzania in 2014, accelerating to 7.3% in 2015. Our 2014 forecast is a slight upwards revision from the 6.9% forecast we held last quarter, based largely on the fact that exports performed more strongly than we expected in the quarter ended June 30. The consumer will be the key driver of economic growth in the country, with purchasing power supported by contained inflation. Tanzania’s current account deficit will continue to widen given the expected poor performance of key export gold, and the growth of imports as the economy expands. Investment inflows will be sufficient to maintain reserves and keep the balance of payments positive, although this surplus will narrow.

We do not believe the constitutional review process in Tanzania will be completed, as is planned, before the October 2015 presidential and parliamentary elections. The political will needed to bring this about appears to be lacking at present, with the constituent assembly (CA) still boycotted by the Union of People’s Constitution (UKAWA).
The delays to the process have resulted in policy uncertainty that is likely to delay some investment into the country’s nascent offshore gas sector.

Major Forecast Changes
R eal GDP growth in 2014 has been revised up from 6.9% to 7.0%.

Table Of Contents

Tanzania Business Forecast Report Q4 2014
Executive Summary. 5
Core Views..5
Major Forecast Changes5
Key Risks To Outlook5
Chapter 1: Political Outlook. 7
SWOT Analysis.. 7
BMI Political Risk Ratings 7
Domestic Politics . 8
Delays To Constitution Risk Derailing Investment.8
Delays to the constitutional review process will continue to hold back key legislation in Tanzania. This will jeopardise investment in the
country, into the nascent offshore gas sector in particular.
Table: POLITICAL OVERVIEW .8
Long-Term Political Outlook 9
Corruption And Reliance On Foreign Money High On The Agenda...9
Tanzania will continue to enjoy broad political stability over the coming decade, with little to suggest the ruling Chama Cha Mapinduzi
party's authority will be threatened. That is not to say the 2014-202 3 period will be without challenges. Chief among these will be
dealing with high levels of corruption and addressing the country's dependence on foreign aid.
Chapter 2: Economic Outlook 13
SWOT Analysis 13
BMI Economic Risk Ratings... 13
Economic Activity .. 14
Consumers To Drive Growth...14
Tanzania's economy will see real growth of 7.0% in 2015 and 7.3% in 2015. This will be driven by private consumption and accelerating
investment into the nascent hydrocarbon sector.
Table: Ec onomic Acti vit y..14
Fiscal Policy 15
IMF Support Paves Way For Eurobond..15
The IMF's approval of a new Policy Support Instrument (PSI) for Tanzania will help the country rein in its current account and budget
deficits, and foster sustainable growth. The PSI will also help Tanzania secure a credit rating and pave the way to market for its maiden
eurobond issuance.
Table: Fiscal Policy16
Monetary Policy .. 17
Inflation In Single Digits Through To Early 201517
Good harvests will help to keep CPI inflation in single digits through the close of 2014 and into 2015. Monetary policy, executed through
control of the money supply, will continue to be relatively tight.
Table: Monetary Polic y17
Balance Of Payments . 19
C/A Deficit Will Remain Sizeable19
Tanzania's current account deficit will continue to widen given the expected poor performance of key export gold, and the growth of
imports as the economy expands. Investment inflows will be sufficient to maintain reserves and keep the balance of payments positive,
though this surplus will narrow.
Table: Current Account...19
Chapter 3: 10-Year Forecast... 23
The Tanzanian Economy To 2023... 23
Robust Growth Forecast On Gas Investment23
We are forecasting a period of robust growth in the Tanzanian economy in the years ahead, as the country looks set to benefit from
its nascent offshore gas sector, and the investment being pumped in to the country to develop this. Increasing regional integration and
significant investment in infrastructure projects will also boost growth. The county remains beholden to the weather, however, through
the importance of its agricultural sector and dependence on hydroelectricity, and this presents the greatest risk to our forecasts.
Table: Long-Term Macroeconomic Forecasts 23
Chapter 4: Business Environment. 27
SWOT Analysis 27
BMI Business Environment Risk Ratings.. 27
Business Environment Outlook. 28
Institutions... 28
TABLE : BMI BUSINE SS AN D OPERA TION RISK RA TINGS28
Table: BMI LE GAL FRA MEWOR K RA TING.29
Table: LABOUR FORCE QUALITY..30
Infrastructure... 31
Market Orientation... 32
TABLE: ANUAL FDI INFLOWS32
Table: TRA DE AN D INVE STMEN T RA TINGS.33
TABLE: TOP EXPORT DESTINATIONS, 2004-2011.34
Operational Risk.. 35
Chapter 5: Key Sectors.. 37
Telecommunications... 37
TABLE : Telecoms Sect or - Mobi le-Hist oric al Data and Forecasts .. 38
Table: Telecoms Sect or - Wireline - Hist oric al Data and Forecasts 39
Other Key Sectors... 41
Table: Oi l and Gas Sect or Key Indic ators.41
Table: Pharma Sect or Key Indic ators41
Table: Infrast ructu re Sect or Key Indic ators...41
Table: Food and Drink Sect or Key Indic ators.42
Table: Aut os Sect or Key Indic ators...42
Chapter 6: BMI Global Assumptions. 43
Global Outlook. 43
Eurozone Downgrade On Poor Q214..43
Table: Global Asumpti ons.43
Table: Developed States, Real GDP Growt H, %...44
Table: BMI VER SUS BLO MBER G CON SEN SUS REAL GDP GRO WTH FORE CASTS, %. 44
Table: Em ergi ng Markets , Real GDP Growth , %..45

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