IMF gives nod to Dar’s plans to revise GDP data

THE International Monetary Fund has given a nod to Tanzania’s plans to rebase the economy saying is necessary to reflect structural changes that have occurred in the economy.

International Monetary Fund (IMF) Director for African Department, Antoinette Monsio Sayeh told Business Standard last Sunday that so many structural changes have taken place since the last time Tanzania had recalculated her national accounts.

“It is important for countries to rebase their economies to reflect various sectors in the GDPs,” said Ms Sayeh who was visiting the country to launch Regional Economic Outlook for SSA.

She noted that countries such as Nigeria and Kenya which have recently rebased, have seen their GDP increase because rapidly growing service sector has been included.

“Most of these countries including Tanzania, I think, rebased in 1990s which is very far away,” Sayeh noted saying economic rebasing is supposed to be done every five years.

Both Nigeria and Kenya have rebased which has shown the important role which telecommunications and film industries especially in Nigeria are playing to boost GDP.

Recently, Kenya joined the ranks of Africa’s top ten economies after rebasing its economy that increased the size by 25.3 per cent becoming the ninth largest economy on the continent. Nigeria did it earlier this year and overtook South Africa as the continent’s largest economy.

The IMF Director said overall, SSA’s economies will maintain an average of 5.0 per cent growth except for Ghana, Liberia and Sierra Leone whose economies will slow down due to the outbreak of the Ebola disease.

“The continued growth of Sub Sahara African countries is supported by the strong performance of the services sector,” said Sayeh who commended the government for maintaining a more than average growth in SSA. National Bureau of Statistics has already announced the process of rebasing the country’s economy.

Like Nigeria, Tanzania’s GDP is set to increase dramatically because of the role being played by the services sector notably mobile phone services, filmmaking and consultancy.

NBS said it expects the GDP to appreciate by 20 per cent after the exercise with mining, construction, telecommunications and natural gas playing a key role. The country will update the base year it uses to calculate economic output to 2007 from NBS said.

A leading University of Dar es Salaam economist, Professor Humphrey Moshi however warned that rebasing the economy does not provide solutions to all the existing problems.

The rebasing process allows statisticians to update their estimates to take account of technological innovations, giving investors a clearer view of the amount and types of activity in the economy.

The state-run National Bureau of Statistics (NBS) said it would release the new data on October 31. Tanzania’s GDP was 33.26 billion U$ in 2013, a government minister said in June.

Economists said the rebasing was expected to increase the size of the economy, which has been buoyed by big offshore natural gas discoveries.

“Tanzania’s economy has been growing rapidly from 2010 onwards, so the rebasing process will likely increase the size of the GDP,” said Prof Moshi.

Last April 2014, IMF’s REO for SSA warned that economic growth in 2014 would be impacted by both external and internal factors, among them slower growth in emerging markets which could impact both export demand and commodity prices.

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