Tanzania projects 6.1% GDP growth as agriculture and mining support recovery

Tanzania is projecting astable economic outlook, with GDP expected to expand by 6.1% in the second quarter, slightly down from 6.2% recorded in the first quarter, amid moderate spillovers from global economic challenges. According to theBank of Tanzaniamonetary policy statement for April, the projected growth will be supported by adequate rainfall boosting agricultural production, a supportive fiscal stance, improved performance in the mining sector, stable power supply and positive business sentiment reflected in the March 2026 CEOs and market perception survey. In addition, prudent monetary policy implemented by the central bank is expected to sustain robust private sector credit growth of above 20% year-on-year.

“The domestic growth projection is conditional on the global economic outlook as well as domestic economic factors,” the report stated. “The impact of ongoing global developments on the domestic economy is expected to remain moderate, supported by the diversified structure of the economy.” Based on the assumptions, Zanzibar’s economy is projected to grow by 6.6% in the second quarter of 2026. The inflation outlook remains dependent on both global and domestic dynamics.

Globally, inflation risks have heightened after the outbreak of conflict in the Middle East. However, domestically, sufficient food supply driven by favourable rainfall, alongside exchange rate stability, supported by adequate foreign reserves, is expected to ease inflationary pressures. Consequently, inflation in mainland Tanzania is forecast at 3.4% in the second quarter of 2026, remaining within the medium-term target range of 3% to 5%.

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In Zanzibar, headline inflation is projected to average about 5.4%. Against this backdrop, the Bank of Tanzania’s monetary policy committee (MPC) resolved to maintain the central bank rate at 5.75% for the quarter ending June 2026, noting that the stance appropriately balanced risks to both inflation and economic growth. The MPC adopted a cautious “wait-and-see’ approach”, aimed at containing potential inflationary pressures while allowing time to assess the full impact of evolving geopolitical tension on both inflation and output. Additionally, the committee narrowed the policy corridor from ±200 to ±150 basis points around the central bank rate to strengthen monetary policy transmission and align the seven-day interbank cash market (IBCM) rate more closely with the policy rate.

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