How large is Tanzania's GDP,how robust her growth?
These questions will be robustly answered come the end of this month when Tanzania re-bases her GDP accounting period to 2007.
Tanzania will re-base her GDP accounting year to 2007 from 2001. The re-base will rope in new sectors and is expected announce a new larger GDP. Economists estimate that Tanzania's GDP is between 20 and 25 per cent larger than current estimates.
According to Daily News, at the end of 2013, Tanzania’s GDP stood at US$33.26 billion. Economists therefore estimate the GDP to have been anywhere between US$39.5 billion and $42 billion by the end of 2013. This will be confirmed at the end of this month when a new base year and new GDP are announced.
Re-basing of the national account series (which includes the GDP) is the process of replacing an old base year with a new and more recent base year. The base year provides the reference point to which future values of the GDP are compared.
Re-basing is meant to reflect recent developments in the economy and expand the basket of consumer goods to reflect changing tastes and preferences. Consequently, countries re-base their economy once in a decade although the UN recommends that re-basing be done every five years.
The structure of the Tanzanian economy has changed dramatically since 2001 with new industries coming up especially in the mining sector. The services sector has also posted tremendous, discernible growth with the telecommunications sector growing from an estimated 500,000 telephone lines in 2001 to nearly 28 million as at the end of March 2014.
In 2001 internet communication was through cyber cafes and was expensive. To date internet is available on the majority of handsets. There was no mobile money transfer then, now it is diffuse.
Although there were some LNG resources at Sonko sonko, they were not fully exploited and the quantity of LNG available in Tanzania is estimated at 53tcf.
Concomitant with the elevation of GDP will be the rise in GDP per capita which will see the country move closer to achieving its target of being a middle income economy by 2020. Estimates based on the 2012 census place the population of Tanzania at 47 million. This works to a GDP per capita $894 compared to $708 in the current estimates.
And given the new larger economy, the growth rates per quarter and per year will also change. Economists say they will not be surprised if Tanzania has been posting double digit growth for a while now.
There are benefits too such as the decline in national debt to GDP ratio which by end of April stood at US$17.853, says the Central Bank of Tanzania. At the old estimates this amount of debt was the equivalent of 53 per cent of GDP.
A debt ratio higher than 50 per cent of one‘s income is considered irrational. However the new base year will trim the debt ratio to 42 per cent of GDP. Tanzania will thus be comfortable to borrow US$1 billion in the Eurobond Market.