Tanzania has trimmed its economic growth forecast for 2012 due to a prolonged drought and chronic energy shortages, but expects output to pick up in the years to 2016, a government minister said on Thursday.

Stephen Wasira, Minister of State in the President's Office, said in a presentation to parliament that drought and frequent power blackouts had caused Tanzania's economic growth rate to slow to 6.4 percent in 2011 from 7.0 percent in 2010.

“We expect gross domestic product growth of 6.8 percent in 2012, which should rise to 8.5 percent by 2016,” he said, revising an earlier growth forecast of 7 percent for this year.

Wasira confirmed the government aimed for single-digit inflation this year, a target analysts expect it to miss due to rising food and fuel prices in particular.

“The government has been taking several measures to curb the inflation rate, including improving food distribution, food production and the central bank's decision to raise minimum reserve requirements on government deposits held by banks from 20 percent to 30 percent,” the minister said.

The high cost of living in Tanzania and rising youth unemployment have stoked anti-government sentiment.

Economic analysts say increasing investor interest in Tanzania's telecommunications, energy and financial services sectors should help drive growth if the world economy recovers.

East Africa's second biggest economy is attracting rising foreign investor interest in its natural gas deposits. The government says reserves stand at more than 10 trillion cubic feet following recent discoveries.

The latest discovery was announced on Thursday by Norwegian oil firm Statoil and its partner ExxonMobil.

Tanzania is Africa's fourth-largest gold producer and its mining sector has attracted major investment over the past decade. - Reuters