The World Bank projects that Tanzania will experience a sharp decline in economic growth in 2020 due to the impact of COVID19. Preliminary simulations indicate that the decrease in growth could potentially place 500,000 Tanzanians below the poverty line.
In the 14th Tanzania Economic Update, the World Bank says that although the country witnessed solid growth in 2019 (6.9%) the gross domestic product will decline sharply to 2.5% in 2020. Tourism was a key factor in a solid performance in 2019 as it constituted more than 26 percent of total exports.
COVID19 pandemic has led to border closures, international travel ban, and measures to curb the spread of the virus have battered the tourism sector. Tour operators anticipate an 80 percent contraction in revenues with mild recoveries expected in 2021.
The effects could be more devastating if the government’s policy response is delayed or not well targeted, or the external environment does not improve markedly this year.
The World Bank fears that the COVID19 pandemic will spark the first recession in Sub Saharan Africa (SSA) in 25 years. In April, the Bank predicted SSA regional growth will decline from 2.4% reported in 2019.
The Bank recommends strengthening health response and transparency to save lives. In addition, the Tanzanian authorities should protect jobs and MSMEs by providing financial aid to bankrupt firms and avoid destruction of productive capacity. There should be a focused social action fund to the informal urban economy who are the most vulnerable households.