Finance Minister William Mgimwa mobbed by the press as he walked into Parliament in Dodoma last year. His newest fiscal strategy could see the size of the Tanzanian economy double over the next five years. PHOTO | FILE
Dar es Salaam. The national economy will almost double in the next five years from what it was last year, but it will not be growing at the rate required to address abject poverty in the country.
According to recently released national figures, Tanzania’s gross domestic product (GDP) is forecast to reach nearly Sh88 trillion in 2017 compared to Sh45 trillion last year.
At that level, the economy will be about Sh36 trillion healthier than it will be this year and Sh50 trillion and Sh43 trillion better off than what it was in 2011 and 2012 respectively.
The Treasury puts the market value of goods and services to be produced in the country this year at Sh51.75 trillion compared to Sh37.53 trillion in 2011.
The GDP value, which is also used to gauge a country’s standard of living and measure its productivity, will increase to about Sh60 trillion next year before jumping to Sh67.35 trillion and Sh76.721 trillion in 2015 and 2016 respectively.
The GDP growth rate between now and 2017 will be at 8.02 per cent, when expansion rate will be 9.1 per cent.
Economists and development strategists have it that the national economy should expand at least by 10 per cent annually, which is the inclusive growth level required to benefit large segments of the population.
“In the medium-term, growth is expected to pick up to an average of eight per cent supported by prospects of increase in foreign direct investment (FDI) particularly in oil and gas explorations, continued implementation of infrastructure projects, favourable weather conditions, and stability in power supply among others,” the Treasury notes in a paper titled Macroeconomic Outlook and Medium Term Focus.
Early this week, the Finance minister, Dr William Mgimwa, revealed a Sh17.7 trillion tentative budget for 2013/14, which is a 17 per cent increase over the current one with a focus on eight areas.
These are digital technologies, ports and railways, power improvement, water, education, health, farming and entrepreneurship services.
The minister told a closed session of a parliamentary committee in Dar es Salaam that the economy grew by 6.9 per cent in 2012 from 6.4 per cent a year before, above the projected 6.8 per cent.
The growth was largely due to transport and communication improvements and higher manufacturing output.
Despite the positive growth trend, the national economy continues to be plagued by power cuts and other infrastructure challenges, such as shoddy roads and a malfunctioning railway network.
However, the country is fast-becoming a regional energy hub following huge offshore natural gas discoveries in Mtwara and Lindi regions.
Dr Mgimwa said the sectors that led the growth in the GDP in 2012 were communications, which grew by 20.6 per cent and financial services that rose by 13.2 per cent.
Whereas manufacturing went up by 8.2 per cent, the construction industry grew by 7.8 per cent.
The expected growth this year will be mainly propelled by the communications sector, which is forecast to grow at 19.2 per cent, construction actvities 9.2 per cent and trade at 8.7 per cent.
“Priority in the government’s 2013/14 budget will be in increasing availability of electricity, developing transport infrastructure...and strengthening information and communication technology,” Dr Mgimwa noted in a presentation.
With recent discoveries of significant gas reserves in addition to its mineral resources, the World Bank says Tanzania’s long-term economic prospects appear promising as these assets are already attracting potential foreign investors.
It, however, cautions that the benefits derived from the exploitation of these natural resources will not materialise in another seven to 10 years.
“Close attention to macroeconomic management during the interim period is crucial,” notes the World Bank Poverty Reduction and Economic Management Unit for the Africa Region in its latest Tanzania Economic Update report titled: Spreading the Wings: From Growth to Shared Prosperity.
According to it, the national economy experienced strong, rapid growth over the past decade. As a result, the country’s per capita income increased from $310 in 2000 to more than $540 in 2010.
It adds that macroeconomic stability has also brought significant dividends in terms of economic growth of up to 1.3 percentage points in annual per capita GDP growth.
However, despite this sustained growth and stability, Tanzania is still a poor country, with approximately one third of its population living below the subsistence level.
Since 2001, the level of poverty in rural areas, where about 30 million people live, has remained stagnant at around 37-40 per cent.
Over the past decade, the country’s rapid and constant economic growth has resulted in only marginal reductions in the poverty rate. This is in sharp contrast with Brazil and Malaysia, or even poor countries such as Vietnam, Uganda, and Ghana.
The Bretton Woods institution warns that this lack of inclusion of poor Tanzanians in economic growth has been a missed opportunity, which threatens to undermine Tanzania’s goal of becoming a middle income country by 2025.
“Growth in Tanzania has been concentrated in a few capital-intensive sectors such as mining and telecoms, and soon natural gas – failing to produce widespread job creation, failing to raise incomes of the masses, and failing to reduce poverty,” says the bank’s country director for Tanzania Burundi and Uganda, Mr Philippe Dongier.
http://www.thecitizen.co.tz/business/-/30121-budget-watch-sh88trn-gdp-by-2017-tzs-economy-to-double-in-5-years-says-treasury-brief
| 
No comments :
Post a Comment