United Republic of Tanzania: 2009 Article IV Consultation, Fifth Review Under the Policy Support Instrument, Request for a Twelve-Month Arrangement Under the Exogenous Shocks Facility, and Request for an Extension of the Policy Support Instrument - Staff R (Electronic book text)

1. Tanzania sustained high rates of broad-based economic growth with generally low inflation over the past decade. Real GDP growth averaged about 7 percent a year during 2000-08, with substantial contributions from the mining, manufacturing, construction, and services sectors (Figures 1-6). However, growth in agriculture-which still accounts for the largest share of GDP and provides a livelihood for the majority of the population, including the country's poorest households-has lagged (at about 4 percent a year). Inflation was kept solidly in check for much of this period, but accelerated in 2008 (13.5 percent at end year), driven mainly by lagged effects of the spike in international food and fuel prices,2 and more recently, by adverse regional food supply shocks. In contrast, nonfood inflation remained modest (5.8 percent).