Global food prices rose sharply, and a severe drought damaged domestic food production, pushing cumulative food-price inflation to 6.6% during the first nine months of 2022. In 2022, a relatively stable exchange rate, coupled with fuel subsidies, helped contain consumer price inflation to just 4.8%, well below the regional average of 10%. The recent Tanzania Economic Update published by the World Bank noted that reversing this pandemic effect could prove challenging amidst considerable development and reform challenges that have been exacerbated by the pandemic shock and spillovers from the war in Ukraine. A minor reduction in the overall poverty rate is anticipated in 2022. The pandemic caused an increase in the poverty rate, from 26.2% in 2019 to 27% in 2021. This is concerning as food makes up about 30% of the consumer price basket. Headline inflation continued to edge up during 2022 as a result of rising international commodity prices and severe drought, reaching 4.2% in the first nine months of 2022 compared to 3.5% in the same period the previous year. The economic recovery in 2022 nevertheless remains broad based with most sectors rebounding to pre-COVID activity levels. For 2022, the World Bank estimates that GDP growth was 4.6%, marginally higher than 4.3% growth in 2021. Strong macro fundamentals allowed Tanzania to emerge from the COVID-19 pandemic in good shape, though economic recovery has been relatively modest due to strong headwinds created by the ongoing war in Ukraine, tightening global financial conditions, and global economic slow-down.
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