Tanzania is expected to maintain the lowest inflation rate among the East African Community (EAC) member countries for the year 2024, according to the World Economic Outlook issued by the International Monetary Fund (IMF). The country is projected to experience a four percent inflation rate, down from 4.4 percent in the previous year, showcasing a positive outlook for price stability.
The report indicates that all EAC member states are anticipated to witness reductions in inflation this year, contributing to the overall economic growth of the eight-nation bloc, projected at 5.9 percent. Tanzania leads the EAC states in inflation reduction for 2024, followed by Uganda and Kenya, with projected inflation rates of 5 percent and 6.5 percent, respectively.
The Democratic Republic of Congo (DRC) and South Sudan are tied with a projected inflation rate of 7.5 percent for 2024. Inflation is also expected to decrease significantly in the smaller EAC states of Burundi and Rwanda, with projections of 10 percent and nine percent, respectively.
Tanzania's low inflation rate suggests economic stability for the country. The report does not provide statistics for Somalia, the newest member of the EAC.
Rwanda and the DRC are expected to lead the EAC states in projected GDP growth for 2024. The DRC is projected to achieve robust growth of seven percent, while Rwanda follows closely with a projected growth rate of seven percent.
The overall economic growth in the East African region surpasses the sub-Saharan average growth rate of four percent, highlighting the collective economic resilience of the EAC. The report notes that East Africa, particularly Tanzania, Rwanda, Uganda, and Kenya, plays a crucial role in driving the continent's economic resurgence.
However, the report expresses some caution regarding the entry of Somalia into the EAC. While expanding the market to 301.8 million consumers and increasing the region's GDP to $312.9 billion, geopolitical tensions and conflicts in Somalia could pose challenges, potentially disrupting trade and investment flows and increasing non-tariff barriers within the region.
One of the major economic risks highlighted in the report is the impact of climate change on critical sectors like agriculture. The report recommends diversification of economies into agricultural processing, infrastructure development, and technological innovations, along with economic empowerment of women, youth, and small and medium enterprises to drive sustainable economic growth.
The 2024 African Outlook Report anticipates overall economic growth on the continent at four percent, a notable increase from 3.3 percent in the previous year. East Africa, with its dynamic sectors such as natural resources, transportation, tourism, and agriculture, is identified as a model region for economic resilience and diversification.