Tanzania’s Current account deficit narrows in July

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By Mnaku Mbani
The current account registered a deficit of USD 1,866.1 million, which narrowed substantially compared with a deficit of USD 4,778.9 million in the corresponding period in 2015. This was largely explained by an increase in exports of goods and services coupled with a decline in imports of goods and services. The Monthly Economic Review for August published by Bank of Tanzania shows that the value of exports of goods and services grew by 7.5 percent to USD 9,810.4 million from the level recorded in the year ending July 2015.

Improved performance was recorded in the export values of travel, manufactured goods and gold while traditional exports declined.
“The performance of most of the traditional export crops continued to be relatively low. The value of traditional exports was USD 755.9 million, a decrease of 16.0 percent from the level recorded in the year ending July 2015,” says a report.
The decline was driven by a fall in export volumes and prices of some traditional exports. The value of tobacco and cashew nuts dropped due to a fall in both volumes and unit prices, while cotton recorded low export value due to a decline in export volume.
The fall in unit prices of most of the commodities was consistent with the general price movement in the world market. On the other hand, export values of tea and sisal recorded increases owing to a rise in both volumes and unit prices while that of coffee and cloves was positively affected by only export volumes as prices declined.
Non-traditional exports was USD 4,602.8 million in the year ending July 2016 compared with USD 4,000.1 million in the corresponding in 2015. The outturn was on account of good performance in the export of minerals, manufactured goods, re-exports and the category of “other exports1”.
Mineral exports particularly gold showed some recovery by registering a positive growth on account of export volumes as prices remained low. Gold exports was USD 1,364.4 million compared with USD 1,266.7 million in the year ending July 2015.
Manufactured goods exports increased by 12.6 percent to USD 1,448.7 million with notable increase in textile apparels, edible oil, plastic items as well as iron and steel products. The increase in manufacturing exports is consistent with booming of manufacturing activities in the economy which has been growing at an average of 6.6 percent for the past three years since 2013.
Services receipts was USD 3,647.9 million compared with USD 3,493.7 million in the year ending July 2015, emanating from increase in receipts from travel and transport services .
The receipts from travel increased slightly to USD 2,045.6 million from USD 2,010.1 million in the year ending July 2015 as the number of tourist arrivals remained broadly the same.
Moreover, receipts from transport increased by 15.4 percent to USD 1,122.8 million on account of increase in the volume of transit goods.
The value of import of goods and services was USD 11,003.4 million in the year ending July 2016, a decline of 18.3 percent compared to the value recorded in the corresponding period in 2015. All categories of goods import recorded a decline .
 The decline was due to depreciation of the shilling, which made imports relatively more expensive, as well as substitution of oil for gas in power generation.
Other factors are related to weakening of the global trade, in part explained by sluggish global economic activity particularly the downturn in industrial production in China as well as decline in global prices for most of the commodities including oil.
During the year ending July 2016, the value of oil import, which is the dominant item in goods import, declined by 11.0 percent to USD 2,774.1 million due to a fall in prices in the world market despite the increase in volume of imported oil.
The volume of imported refined petroleum products (petrol, diesel, kerosene and heavy furnace oil) increased marginally to 2.05 million metric tons in the year ending July 2016 compared with 2.03 million metric tons, while the prices in the world market fell to USD 535.9 per metric ton from USD 728.5 per metric ton in the corresponding period in 2015.
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