Emerging economic powerhouse in East Africa

Exports of minerals, mainly gold and cooper, as well as agriculture, tourism and construction have been boosting Tanzania’s GDP over the last decade. GDP growth in 2025 is forecasted at +5.6%; since 2019, growth has averaged above +5% since it was not severely affected by the global pandemic-related slowdown. Tanzania’s balance between rich and diverse commodities, a growing export-oriented manufacturing base, improving infrastructure and fast-growing tourism appeal has supported growth in recent years. Agriculture activities continue to be the main contributor to the GDP, mainly through extensive employment. Coffee has been an increasingly exported commodity in recent years, while minerals, especially raw copper, have become a major success story in Tanzania. In one decade, its export value has doubled and copper is increasingly being refined in the country mainly to serve Asian countries, notably India. Last April, a new license was given to US-based Lifezone Metals to establish a processing facility locally. Manufacturing has also become a growing industry, thanks to the export of cotton-derived products such as knitted t-shirts to South Asia. Finally, tourism is among Tanzania’s most successful industries: an estimated 2m foreign tourists arrived in 2024 and earnings from the industry are estimated to have been close to USD4bn. A +20% increase in tourists is forecasted for 2025.

Inflation in Tanzania is on an upward trend, projected to climb to 5% in 2025 after ending 2024 at 3.1%. Tanzania was able to shelter itself from the global inflation surge, thanks to effective monetary policy – which maintained the key policy rate at 6% – orthodox fiscal policy – even though the government enacted some temporary subsidies for fuel and fertilizers – and a healthy reserves level at four months of imports. In addition, food prices were also sheltered, thanks to Tanzania maintaining an impressive strategic grain reserve that reached 340,000 tons in 2024 and that was key to supply grain to neighboring countries. This strategy stayed consistent with what was agreed on with the International Monetary Fund, which praised the fiscal prudence at play and the legislature’s proactiveness in pushing forward the reforms targeted at balancing economic and budgetary imbalances.

Downside risks come from climate shocks, vulnerabilities to global commodity prices shocks as well as an increasing fragmented geopolitical order.

With an average life expectancy at birth of 66 (seven years more than in Mozambique and five more than in Kenya), half of the country’s 55mn residents under the age of 15, a literacy rate of more than 80% and long-lasting poverty, the next decade may see a huge shift in politics and grassroots demands in Tanzania. In October 2025, a new round of Presidential elections is scheduled to take place. The current President Suluhu Hassan is expected to run again, extending her rule to 2030. Under the current government’s national Five-year Development Plan, several sectors and areas have been identified to promote long-term growth. Among the priorities lies the reduction of energy imports via the establishment of an LNG plan to take advantage of the gas fields in the southern region bordering Mozambique, which should be added to Tanzania’s oil refinery capacity. In addition, a new oil pipeline bringing 200,000 barrels per day from Uganda’s fields should be operative in 2026 and could bring further energy sources. Hydropower is also being advanced by the opening of a controversial dam in 2024, which will add 235MW to the grid, and the Julius Nyem dam, which is expected to be operative in 2025. Infrastructure investment has also soared in the last few years, including the development of cross-border trains linking the economic hubs of the East Africa Community members, Tanzania’s natural region of trade and influence.

Tanzania’s economic ties have also expanded outside the region towards the Indian and Pacific Ocean, including with the UAE, China and India, which are now the country’s main export destinations. Tanzania’s duty-free access to the Indian market, as well as the arrangement to conduct bilateral trade in Indian rupees, will strengthen business ties with India. A new agreement in June 2024 was signed with the South Korean government, establishing a new credit line worth USD2.5bn. The strong ties with the Middle East remain, especially with the UAE, which operates part of the Dar Es Salam port via DP World – which should double cargo traffic by 2032 – as well as Egypt, which supported the construction of the Juluis Nyem dam. Tanzania has also been growing its political and military ties with the BRICS group, and most importantly with China, with whom it has performed military drills in recent years. While Tanzania’s economic and political influence and scope are growing, it also faces challenges with neighbors, given border disputes with Malawi over the demarcation of the lake separating both countries, for example.

Contract cancellation risks remain elevated, while security risks are less prominent than among regional peers. In recent years, the state has lost several international arbitrations against foreign companies for canceling licenses for mining activities (nickel and rare earths) and terminating the lease contract of a construction company in the real estate sector in Zanzibar. At the moment, other similar cases are pending, and this could lead the government to terminate or renegotiate bilateral investment treaties as unfavorable and costly to the host country. Despite the resurgence of riots and security crises in the area (the Democratic Republic of Congo, Mozambique, as well as South Sudan and the Horn of Africa), only isolated events of violence have been recorded in the northern regions around the main mining hubs, mostly by individuals or small groups of common criminals, and along the border with Mozambique by terrorists trespassing in the Tanzanian regions of Rovuma and Mtwara.