By a Correspondent, 1st January 2010

Tanzania's export trade has weathered the global recession, with little adverse effects on its tourism and mining sectors, according to statistics released by the Bank of Tanzania.

The figures show that Tanzania actually gained from the crisis in terms of international trade, in the wake of a decline in commodity prices in the world market.

Total export earnings during the year ended September increased by 3.2 per cent, compared to foreign exchange receipts generated during the same period in 2008.

While the exports rose to US$4.6 billion from US$4.5 billion, imports declined b y 4.4 per cent to US$7.5 billion from US$7.8 billion during the same period last year.

The central bank attributed the ease in the import bill to lower oil prices in t he world market, due to decreased demand that was sparked by the global downturn.

Tanzania's current account deficit up to the end of September 2009 decreased to US$2.06 billion, compared to US$2.95 billion recorded the previous year.

Official statistics show that exports of goods and services have been on an upwa rd trend, albeit slightly, while lower oil prices helped reduce the current account deficit.

The oil bill declined by 24.4 per cent to US$1.3 billion in the year ended Septem ber 2009, largely due to a fall in world market oil prices, though the volume of oil imports increased from 2.2 million tonnes last year to 2.9 mil lion tonnes up to September 2009.

"With all the adverse consequences of the economic crisis on Tanzania, it shou ld be appreciated that the decline in world commodity prices has also reduced the cost of imported intermediate goods.

This has reduced the cost of production as well as eased pressure on domestic inflation," said Joe Massawe, head of economic research and policy at the Bank of Tanzania.

Meanwhile, the Head of the International Monetary Fund (IMF) in Tanzania, David Robinson, said the country's economic performance during the global crisis was relatively better because of its limited linkage to the global economy.

"The impact has come through the second wave of the crisis -- lower demand for Tanzania's exports, including a slowdown in tourism and investment," Robinson remarked.

But an economist at the University of Dar es Salaam observed that the decrease in the current account balance would have been beneficial to Tanzania had proceeds from the leading export sectors -- tourism and gold -- been retained in the country.

"Big mining and tour companies are foreign owned. They repatriate every cent they get from their business. What does that leave Tanzania with?" asked Elinami Minja of the Business School at the university.

Nearly 40 per cent of Tanzania's exports go to China, India, Netherlands, Germany and United Arab Emirates.

The country's exports to the Southern Africa Development Community (SADC) and East African Community (EAC) partner states have also picked up.

Tanzania's inflation rate is expected to ease in coming months as food harvests hit the market but rising oil prices will keep pushing the price of other goods up, analysts said recently.

The year-on-year inflation rate eased to 12.5 per cent in November from 12.7 per cent in October, the National Bureau of Statistics (NBS) said.

Food carries a 55.9 per cent weight in the basket of goods used to measure inflation but this is expected to fall when the east African country revises the weightings.

"The decision to re-weight the basket is only going to have a limited impact because we see non-food prices rising next year, largely due to rising oil prices," said Matthew Searle, sub-Saharan Africa specialist for Tanzania at data analysis firm Business Monitor International.

Analysts say inflation in east Africa also depends on rainfall. The region relies heavily on rain-fed agriculture and drought in the past few years has affected its economies badly.

Central Bank Governor Benno Ndulu told Reuters in September that Tanzania intends to lower food's weight to about 42 or 43 per cent.

Like neighbouring Kenya and Uganda, Tanzania has experienced double-digit inflation since last year due to higher commodity prices, crossing into double digits in September 2008 for the first time in nearly 10 years.

But Kenya's inflation rate shrank to 6.6 per cent year-on-year in October and 5.0 per cent in November from 17.9 in September after it changed the method of calculation.

"We see a period of disinflation early next year as food prices are reined in by supply as the harvest arrives in January," Searle said.

Food inflation rose by 2.2 per cent compared with a 1.6 per cent jump in October, while non-food inflation dipped by 0.3 per cent during the month from 0.4 per cent the previous month, NBS said.

Food items whose prices rose were cereals, potatoes, and fruits, meat, cooking oil, beans, cowpeas, groundnuts and meals from restaurants.

Non-food inflation increased to 5.0 per cent in the year ended November 2009 from 4.4 per cent in the year ended October 2009. Items whose prices eased include kerosene, charcoal, furniture and personal care products.

On a monthly basis, the inflation rate rose by 1.4 per cent compared with 1.1 per cent in October. Tanzania will publish inflation data using a new formula as early as this month when the country is expected to release November's price growth figure, the National Bureau of Statistics has said.

The East African country will switch to the geometric mean from the arithmetic mean, to calculate inflation on the advice of the International Monetary Fund and World Bank, Ephraim Kwesigabo, an economist with the agency says.

Tanzanian statisticians will present their methodology to officials at the two multilateral lending organizations today in Dar es Salaam, possibly delaying plans to publish November inflation data by tomorrow, Kwesigabo said.

Neighboring Kenya introduced the geometric mean formula last month, slashing the inflation rate to 6.6 per cent in October from 17.9 per cent the previous month under the old system.

Sources: http://www.dailynews.co.tz, (PANA, REUTERS)