The Tanzanian economy has been doing quite well lately. Real GDP has grown at 6 to 7 per cent
for the past several years and is expected by the IMF to continue growing strongly in the next few
years. However, inflation has picked up as well. According o the Bank of Tanzania headline
inflation (including food and fuel) and been just over 4% in October 2010 but had risen to nearly
18% by October 2011. The energy and fuels rate in October 2011 was over 37%!)
The IMF expects economic performance to strengthen further in 2012 and over the medium term,
benefiting from the implementation of the five-years development plan and initiatives under the
Southern Agriculture Corridor of Tanzania (SAGCOT). One new factor is the strong prospect of
substantial new foreign direct investment in Tanzania’s natural gas sector in the near future.
According to some reports the confirmation of some 1.7 trillion cubic meters of natural gas
reserves may be forthcoming over the next five years. Discussions have been under way in
Tanzania on how to make the most of this potential natural resource wealth and a Natural Gas
Master Plan is being developed. 18
The economy depends heavily on agriculture, which accounts for more than a quarter of GDP,
provides 85% of exports and employs about 80% of the work force.19 in GDP composition by
sector in 2011, services accounted for about half with the rest divided more or less equally
between agriculture and industry.
