Tanzania Economic Update, Issue 20 : Overcoming Demographic Challenges while Embracing Opportunities

Tanzania has managed to sustain its growth momentum despite the intensifying effects of climate change. While Tanzania's economy continues to expand, recent growth has been concentrated in sectors that employ few workers from poor households, limiting its impact on poverty. The Bank of Tanzania (BoT) has implemented an effective monetary policy designed to curb inflation and alleviate mounting short-term demand pressure on foreign exchange. While Tanzania's recovery continues to accelerate, several serious threats cloud its economic outlook. Key risks include the slow or incomplete implementation of structural reforms, the damaging effects of climate change on the agriculture and tourism sectors, and the possibility of a global recession caused by fiscal and monetary policy tightening in advanced economies and major EMDEs. To mitigate these risks, policymakers must accelerate structural reforms as part of a sustained effort to attract greater private investment and spur resilient and inclusive private-sector-led growth. Over the longer term, one of the country's key challenges will be to complete its structural economic transformation, which will require creating a more favorable business climate to support the growth of the industrial and services sectors while boosting agricultural productivity. Another key long-term growth challenge will be achieving more balanced and inclusive growth