Tanzania: Trade Deficit Keeps Growing - Bank

Tanzania's trade deficit widened in the year ending March to $2.3 billion down from a deficit of $2.2 billion recorded in March last year the central bank has said.

The deficit is caused by an increase in goods import that outweighed the impact of the increase in export of goods and services, according to the Bank of Tanzania (BoT) monthly economic review report recently released.According to the report, the increase in goods import bill was mainly driven by increase in oil prices in the world market as the volume remained almost unchanged.

The report also indicates that exports of goods and services had increased compared to the corresponding period a year earlier. "The increase recorded was largely driven by recovering in export of manufactured goods and travel receipts which was mainly earnings from tourism activity," reads part of the monthly economic review.

Non-traditional exports continued to grow reaching $3.4 billion compared to $2.5 billion recorded in the preceding year with gold and manufactured goods accounting for much of the increase.

Gold and manufactured goods accounted for about 50 per cent and 30 per cent respectively of the total non-traditional exports. The report attributes this development to rise in gold price in the world market and increased demand of manufactured goods in the neighbouring countries. Gold export had increased from $1.4 billion to $1.7 billion while manufactured goods had increased from $524 million to 1.0 billion.

Major exports of manufactured goods include cement, textile apparels (including mosquito nets), edible oil, plastic items, products of iron and steel, wheat flour and paper and paper products.

Travel increased from $1.1 to $1.3 billion while traditional exports which stagnated for the past two years, recorded an improved performance of $667.7 million being 38.5 per cent high compared to the 482 recorded last.

Much of the increase in traditional exports was registered in cashew nuts and tobacco which increased in export volumes and unit prices. "It is worth noting that the two crops recorded bumper harvests in 2010/11 hence contributing to the increase in export volumes," says the report.

The export value of coffee also increased following a rise in export prices as the volume exported recorded a decline. The increase in export unit price of coffee was associated with a general increase in global demand in the recent months.