22 September 2011

Tanzania: National Bank Rules Out Another Economic Crisis

BANK of Tanzania (BoT) said on Thursday the economy was not ready for a second global financial crisis as macroeconomics pillars remain unstable but ruled out the possibility of another economic shock in the near future.

The central bank said the inflation is projected to stay at double digits in the rest of the year, with electricity woes easing in December while the world oil prices are expected to remain above 100 US dollar a barrel.

BoT's Director of Economic Research and Policy Joe Masawe told the 'Daily News' that, "We (Tanzanian economy) are not ready for another crisis as fundamental pillars remain shaky but we are not going back to another recession at near future."

He added that despite the forecast slowdown in global economic recovery, the country's GDP this year will remain at six per cent before recovering fully to seven per cent next year.

Tanzania mainly trades with emerging countries-China and India whose economies grow steadily unlike the advanced economies, giving hopes that local exports would not be affected.

Economists however have raised concern over the country's inability to handle another financial crisis, with IMF saying that the global economic recovery is weak and bumpy.

The fear comes from the fact that the advanced economies face anemic growth of only 1.6 per cent in this year, shattering hopes for exporting business to the developing markets.

"The global economy is in a dangerous new phase global activities have weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing," the IMF said in its September 2011 World Economic Outlook.

Mzumbe University's Dar es Salaam Business School Honest Ngowi, said "We are not ready for another shock as no efforts are made to hedge the gap should exports and tourism earnings, and donor aid and Diaspora's remittance fail to come."

"It's business as usual," Dr Ngowi said, adding "As if we haven't learned from the previous crisis we are waiting to be taken by events.

We are reactive instead of being proactive. This is wrong." The Senior lecturer said the country "Will be a laughing stock if we are caught up pants down."

While BoT remains confident that this year's target of GDP would be attained, power woes have lowered economic growth in the second quarter to 6.7 per cent from 7.2 per cent of the same quarter in 2010.

The National Bureau of Statistics says some of the sectors including manufacturing were hard hit by erratic power supply.

The shilling has slide to the 45-year low and signs are not showing any recovery soon, while budget's donor dependency is still high, hovering at about 40 per cent.

Copyright © 2011 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.