The fight for East Africa’s economic supremacy is on and this might be the reason Kenya is trying to push Tanzania out of the EAC block. Tanzania’s economy is on the rise and it seems, the country is set to overtake Kenya as East Africa’s biggest economy by 2030 if the current Gross Domestic Product (GDP) growth rate remains the same.
Tanzania’s economy grew 6.7 percent year-on-year in the second quarter of 2013 from 6.4 percent in the same period a year ago, but weakened compared with the first quarter, official data showed on Wednesday while in the same quarter, Kenya’s economy expanded by an annualized 4.3 percent a fraction slower than the 4.4 percent recorded a year earlier, official data showed on Tuesday.
Tanzania’s economy has been growing at more than 5 percent a year for nearly a decade but infrastructure spending has lagged, with poor transport links and energy shortages blamed for uneven growth. The East Africa’s second-largest economy is targeting GDP growth of 7 percent this year, slightly higher than the 6.9 percent achieved in 2012. Tanzania’s growth in the second quarter was driven by growth in financial services and communications sectors, while the fishing sector lagged, NBS said in a report.
The Kenya National Bureau of Statistics said growth was driven by the agriculture, manufacturing and financial sectors, while the hotels and restaurants sector posted a 11.4 percent contraction due to political uncertainty around March’s presidential election. The Kenya government has forecasted 6% growth in 2013.
It should be noted that Kenya’s unemployment rate is now at 40% compared to 12.7% in Janaury of 2007 while Tanzania’s unempolyment rate fell to 10.7% compared to 12.2% for the same time frame. Despite all this, the Kenya government expects its middle class will expand enough by 2030 to pull the country’s status up to that of a middle-class nation.
Kenya runs an annual trade deficit of about $8.8 billion while Tanzania recorded a trade deficit of $383.60 Million in July of 2013.