Tanzania to review GDP figure after lower World Bank estimate
International / 19 July 2019, 4:00pm / Omar Mohammed and Fumbuka Ng'wanakilala
INTERNATIONAL – Tanzania’s statistics agency said on Thursday it may review its economic growth figure for 2019 after the World Bank came up with a significantly lower one.
In the second major report this year from a multilateral financial institution contradicting rosier government figures, the Washington-based Bank said gross domestic product expanded 5.2 percent last year as investment, exports and private lending declined.
Tanzania’s finance minister told parliament last month that growth was 7 percent last year
The World Bank, which makes its calculations based on state data, forecast 2019 growth at 5.4 percent - again markedly lower than the government’s estimate of 7.1 percent.
Albina Chuwa, head of the state-run National Bureau of Statistics (NBS), defended its methodology and conclusions.
“We have gone across the country to do actual data collection in the field, unlike someone sitting in Washington doing GDP modelling on your behalf,” she said.
“For national planning purposes, we will continue to use the official data of 7.0 percent.”
But local authorities would meet World Bank representatives in August to look at the bank’s assumptions. “So we may also come up with something else and review the GDP figures,” she said.
President John Magufuli embarked on an ambitious programme of industrialisation after coming to power in 2015, investing billions of dollars in infrastructure, including a new rail line, reviving the national airline and a hydropower plant.
But government interventions in mining and agriculture have led to declining investment. Foreign direct investment has more than halved since 2013 and private sector lending growth dropped below 4 percent in 2018, from a 20 percent average between 2013-16.
The World Bank report follows an unpublished International Monetary Fund (IMF) paper in April that also raised questions over Magufuli’s handling of the economy.
A leaked version of the report seen by Reuters says “unpredictable and interventionist” policies are undermining the economy and forecasts medium-term growth around 4-5 percent - again below official forecasts.
In its report, the World Bank said investment growth was subdued partly because of government struggles to meet spending targets in development projects.
The economy could grow to 6 percent by 2021 “with a modest improvement of the business climate and a pick-up in (foreign direct investment) and other private investment,” the bank said.
Imports rose 7.8 percent last year, but exports dropped nearly 4 percent and, the year to January 2019, the current account deficit widened to 5.2 percent of GDP.
The government should minimise economic risk by improving the business environment and fiscal management, it said.