Country Report Tanzania January 2009

Outlook for 2009-10

• The president, Jakaya Kikwete, will continue to face the most challenging period of his presidency, as high inflation erodes living standards. However, the fragmented opposition is unlikely to be able to pose a challenge.
• The ruling Chama Cha Mapinduzi (CCM) is likely to choose MrKikwete as its candidate in the 2010 presidential election. He is expected to win, but with a smaller majority on a lower turnout, as the electorate expresses its discontent.
• The government will stick to its pursuit of market-orientated reforms, including the promotion of private-sector growth by improving infrastructure and maintaining macroeconomic stability, but progress will be slow.
• The global economic slump will hinder Tanzania's economic performance and the Economist Intelligence Unit has lowered its annual real GDP growth forecast to a robust 5.7% in 2009 and 6.1% in 2010 (previously 6.9% and 7.1%).
• Inflation will ease as food priceswhich account for over 50% of the consumer price indexfall in line with global trends. We therefore forecast an average inflation rate of 7.7% in 2009 and 6.3% in 2010.
• High capital imports will keep the trade account in deficit, and we forecast wide current-account deficits of 12.7% of GDP in 2009 and 11.8% of GDP in 2010.

Monthly review

• The battle against corruption has continued: a former permanent secretary at the finance ministry, Gray Mgonja, was arrested in December, accused of corrupt practices in the extension of a contract in 2005.
• The parliamentary speaker has indicated that he does not think that the current parliament would amend the constitution to allow the prosecution of a former president, an idea recently promoted by some parliamentarians.
• In view of the global downturn, the Tanzanian authorities have lowered their GDP growth forecast for 2009 from 8.1% to 7.3% and postponed the launch of a debut Eurobond.
• The shilling has been coming under renewed pressure to depreciate in early January, reflecting strong local demand for foreign currency and negative real interest rates for local deposits.
• Falling global oil prices have not led to lower petrol prices in Tanzania. The authorities attempted to impose lower regulated prices in January, leading to the closure of 25 fuel stations in Dar-es-Salaam and consequent fuel shortages.
• Following the decision in 2008 to build a railway between Tanzania and Rwanda, plans have been announced for a road linking Burundi and Rwanda to Tanzania, also scheduled to be operational in 2012-13.

This report covers the following industry codes:
SIC Code: 60;10;47
NAICS Code: 52;212;48

This report covers the following industry codes:
SIC Code: 60;10;47
NAICS Code: 52;212;48