Despite Tanzania’s inflation and economic growth remains within the desired paths in the first quarter of 2025, the Bank of Tanzania’s Monetary Policy Committee (MPC) has expressed concern that ongoing global trade tensions and geopolitical conflicts could negatively impact the country’s inflation and economic output.
In its regular meeting held on April 3, 2025, to review recent economic performance and the outlook for the second quarter, the MPC noted that while economic activity and growth prospects remain strong in both advanced and emerging economies, risks remain.
“Trade tariff uncertainties and geopolitical conflicts might undermine global growth,” the committee said in its official statement.
The concerns might be heightened by recent developments, including a significant protectionist measure announced by the United States on Wednesday, April 2, 2025, which involved tariffs globally. This move is expected to send shockwaves through the global economy.
In addition, geopolitical tensions continue to escalate globally, with the African Great Lakes region particularly the Democratic Republic of Congo (DRC), Sudan, and Somalia showing renewed signs of conflict.
To mitigate the potential negative spillover effects of these global challenges, the MPC has recommended maintaining the Central Bank Rate (CBR) at 6 percent. It also emphasized the importance of implementing monetary policy measures to ensure that the 7-day interbank market rate remains within the target range of 4 to 8 percent.
According to the MPC, a combination of effective monetary policy, sufficient food supply, prudent fiscal management, and stabilizing global energy prices has helped keep inflationary pressures under control. In the first quarter of 2025, inflation in mainland Tanzania averaged 3.2 percent, while in Zanzibar it dropped to 4.8 percent from 5.3 percent in the previous month.
Economic growth was estimated at 5.5 percent in mainland Tanzania and 7.2 percent in Zanzibar in the fourth quarter of 2024. Looking ahead, the MPC projects the economy to grow by 6.1 percent in mainland Tanzania and 6.5 percent in Zanzibar in the second quarter of 2025.
