According to International Monetary Fund, the world economy grew by 3.9 percent in 2011, compared to 5.3 percent in 2010. the low growth was due to the economic crisis in the Euro area caused by financial fragilities, particularly, losses in the banking sector, rising fiscal deficits and instabilities in the Arab countries.
Africa’s economic growth slowed down to 2.7 percent in 2011 compare to 4.6 percent in 2010, mainly due to political unrest in the North African countries. Growth in the Sub-Sahara African countries slowed to 5.1 percent in 2011 compared to 5.3 in 2010.
The real GDP grew by 6.4 percent in 2011 compared to 7.0 percent in 2010. The slowdown in growth is largely attributed to drought conditions in some parts of the country which adversely affected agricultural production. Electricity outage contributed to low performance in manufacturing and other economic activities that rely on electricity. Despite the slowdown in overall growth, communication, financial intermediation, construction and education sub-sector recorded higher growth rates ranging between 6 percent and 19 percent.
The growth rate of the agriculture sector, which employs about 75 percent of the labour force declined from 4.2 percent in 2010 to 3.6 percent in 2011, whereas population growth rate continued to be high at 2.9 percent.
In the 2011 the GDP was Tshs 37.5 trillion at current prices. With an estimated population 0f 43.2 million people for Mainland Tanzania in 2010 and 44.5 million people in 2011 per capita income for 2011 was Tshs 869,437.3 compared to Tshs 770,464.3 in 2010 equivalent to an increase of 12.8 percent in per capita income.
The annual average inflation rate rose from 5.5 percent in 2010 to 12.7 percent in 2011.
The annual inflation rate which excludes food and energy for the year ended April 2012 rose to 9.0 percent compared to 5.7 percent in April 2011.
This is attributed to the rise in the price of oil, transport costs and imported inflation from the trading partners particularly China and India.
The annual inflation rate for food increased to 24 percent in the year ended April 2012 compared to 9.2 percent in year ended April 2011. The annual inflation rate for energy increased from 22.1 percent registered in year ended April 2011 to 24.9 percent in April 2012.
Overall the average lending rate charged by commercial banks decreased slightly to 14.21 percent in December 2011 from 14.92 percent in December 2010.