New Country Reports market report from Business Monitor International: "Tanzania Business Forecast Report Q3 2013"

Boston, MA -- (SBWire) -- 08/20/2013 --Protests against a gas pipeline in southern Tanzania are the latest example of simmering dissatisfaction among ordinary citizens. The authorities face a tough balancing act in addressing concerns while maintaining an attractive business environment. The government's response to the demonstrations will also have a bearing on the balance of political power in the country.

These risks aside, we are forecasting Tanzania's economy to grow by 7.1% in both 2013 and 2014, up from an estimated 6.9% in 2012, as falling inflation and big public and private sector investment plans boost consumption and gross fixed capital formation. Investment into the natural gas sector should see growth head towards the double digits later in the decade.

Strong revenue collection and prudent spending during the first half of the 2012/13 fiscal year suggests that the Tanzanian fiscal accounts remain in a healthy position. We are forecasting the budget deficit to decline as a proportion of GDP in the years ahead as we expect this trend to continue.

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The outlook for Tanzania's balance of payments has deteriorated in recent months following a decline in gold prices while unrest could pose a threat to foreign investment. Although we do not think that a crisis is imminent, we warn that risks have grown.

Major Forecast Changes

No major forecast changes.

Key Risks To Outlook

The major risk to our economic outlook comes from the weather. Poor rains would not only exacerbate tight food supplies (food price inflation was the major driver of rapidly rising headline inflation in 2011) but would also once again hamper hydroelectricity production, raising costs for businesses and, by extension, consumers.

The country's infrastructure deficit is another concern; a failure to make significant progress would likely hold the economy back from reaching its significant potential.

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