Despite the fact that the world economy is vulnerable to tighter financial circumstances, climate-related threats, the ongoing crisis in Ukraine, and the cumulative consequences of the COVID-19 epidemic, the threats to Tanzania's economy have been reported as mild, according to a recent study.
According to the Bank of Tanzania's (BoT) Financial Stability Report, the favorable macroeconomic climate, the revival of corporate activity, and the government's policy initiatives were the major causes of the moderate risk.
According to the research, a resurgence in economic activity, rising family income, and loosened credit standards by banks were the primary factors that kept the danger to individuals and non-financial corporates at bay.
Based on data from the report, the world economy will expand by 3.8% in 2023 as a result of the ongoing financial crisis, the conflict in Ukraine, and the cumulative impacts of the COVID-19 epidemic. Despite external shocks, the performance of the domestic economy remained steady.
For Tanzania Mainland and Zanzibar, respectively, the domestic economies increased by 4.7% and 5.4% in 2022, according to the research. The revival of economic activity and consistent governmental and private sector investment both contributed to the growth.
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Additionally, it reveals that the economy was expected to expand by 5.2% for Tanzania's Mainland and 7.2% for Zanzibar in 2023, respectively. This projection was made possible by better business conditions, the banking industry's profitability, the availability of liquidity to finance ventures, and government investments in infrastructure.
The paper notes that despite the optimistic prognosis, the expansion of the domestic economy is nevertheless vulnerable to risks associated with the changing environment, the continuing War in Ukraine, and tighter financial circumstances. Increased disposable income resulted in a reduction in family risk.
According to the research, despite difficulties brought on by the COVID-19 epidemic, tight financial circumstances, and the repercussions of the War in Ukraine, the domestic financial system remained strong, robust, and stable in 2022.
“The global financial system was vulnerable to risks arising from the War in Ukraine, climate change, and tighter financial conditions. During 2022, global growth slowed to 4.4 percent from 5.9 percent recorded in the preceding period, owing to supply-chain disruptions caused by the War in Ukraine, the frequent resurgence of the Covid-19 pandemic, particularly in China and its cumulative effects, tightening financial conditions and climate-related constraints leading to high food and energy prices,” reads the report.