Tanzania Business Cycle
Tanzania Business Cycle.
Tanzania is one of the poorest countries in the world. According to the United Nations’ data approximately 36% of the global population (43.7 million people) lives below the poverty line. This signifies that the per capita income of Tanzania is relatively low. The Tanzanian economy depends highly on agriculture, which makes up 40% of the Gross Domestic Product (GDP), provides 85% of exports and employs about 80% of the labour force. The remaining 20% is employed either in tourism, construction, mining or the service sector. Although agriculture has boosted Tanzania’s economy, hurdles still exist due to the poor infrastructure of the country. However, the World Bank and International Monetary Fund (IMF), together with private foreign companies are adopting measures to develop the country in order raise its GDP, and have a sustainable growth rate. (Roubin Global Economics 2012).
The business cycle represents four phases that the economy of a country goes through over a period of time, moving away from it actual growth trend as suggested by Grant 2000. These include a) depression, b) recovery, c) boom and d) recession. The graph (1) in Appendix A shows, how a economy moves through the four stages, moving away from the actual growth trend. At each stage the economic activities and the total output produced by the economy fluctuate. In addition to that, at each stage the macro economic variables, which include inflation and unemployment, also fluctuate. The wealth of the country also fluctuates at each stage signifying that at each phase of the business cycle the level of consumption, investment, government expenditure, exports and imports fluctuate. (Gant 2000).
Below the graph represents Tanzania’s business cycle from 1960 to 2011. The graph represents the four phases of the business cycle according to Tanzania’s economy, also represents how the economy moves away from its actual growth trend.
Graph 1: Bigsten and Danielsson(2011)
Tanzania is one of the poorest countries in the world. According to the United Nations’ data approximately 36% of the global population (43.7 million people) lives below the poverty line. This signifies that the per capita income of Tanzania is relatively low. The Tanzanian economy depends highly on agriculture, which makes up 40% of the Gross Domestic Product (GDP), provides 85% of exports and employs about 80% of the labour force. The remaining 20% is employed either in tourism, construction, mining or the service sector. Although agriculture has boosted Tanzania’s economy, hurdles still exist due to the poor infrastructure of the country. However, the World Bank and International Monetary Fund (IMF), together with private foreign companies are adopting measures to develop the country in order raise its GDP, and have a sustainable growth rate. (Roubin Global Economics 2012).
The business cycle represents four phases that the economy of a country goes through over a period of time, moving away from it actual growth trend as suggested by Grant 2000. These include a) depression, b) recovery, c) boom and d) recession. The graph (1) in Appendix A shows, how a economy moves through the four stages, moving away from the actual growth trend. At each stage the economic activities and the total output produced by the economy fluctuate. In addition to that, at each stage the macro economic variables, which include inflation and unemployment, also fluctuate. The wealth of the country also fluctuates at each stage signifying that at each phase of the business cycle the level of consumption, investment, government expenditure, exports and imports fluctuate. (Gant 2000).
Below the graph represents Tanzania’s business cycle from 1960 to 2011. The graph represents the four phases of the business cycle according to Tanzania’s economy, also represents how the economy moves away from its actual growth trend.
Graph 1: Bigsten and Danielsson(2011)