An end of year review released midweek says that Gross Domestic Product (GDP) growth stood at 4.8 per cent in 2020 compared with 7.0 percent recorded in 2019.
“The slow growth reflected the impact of the pandemic on economic activities, particularly those directly exposed to external shocks,” the report noted, elaborating that growth was driven by construction, agriculture, transport and storage, as well as mining and quarrying.
The fastest growing sectors were construction, transport and storage, along with information and communication, while agriculture sustained the largest sectoral share in GDP, at 26.9 per cent, followed by construction (14.4 per cent), wholesale and retail trade (8.7 per cent) and manufacturing (8.4 per cent).
BoT predicts that GDP growth is likely to rebound in the coming year, reflecting recovery of economic activities particularly in the hospitality industry.
The Governor, Prof. Florens Luoga said that in a bid to mitigate the adverse impact of the pandemic on the economy, the central bank scaled up accommodative monetary policy to ensure adequate liquidity in the economy, implementing a range of measures to safeguard the stability of the financial system.
“These measures, combined with fiscal policy interventions, immensely contributed to avoidance of economic recession,” the statement underlined, reiterating that weakening external demand for exports and decrease in tourism, led to decline of foreign reserves.
The forex reserve all the same remained consistent with the country’s benchmark of at least four months of import cover, BoT noted, asserting also that inflation remained within the target of three to five per cent during the year.
The rate was also in line with the East African Community (EAC) and Southern African Development Community (SADC) convergence criteria of not more than eight per cent and a range of three to seven percent, respectively.
“Annual headline inflation averaged 3.3 per cent compared with 3.5 per cent earlier, on account of low prices of food, and moderate increase in energy and fuel prices,” it said.
Inflation is expected to hover within the same range during the remainder of this financial year, though anticipated stability in food supplies were shaken by poor seasonal rains towards the end of the year, observers noted.
A stable exchange rate plus prudent monetary and fiscal policies remain critical to stemming inflationary pressures, with food availability and local gas reducing the impact of high oil prices in global markets.
BoT will continue engaging stakeholders to maintain price stability and achieve monetary policy targets even as the balance of payments in the Treasury improved to a surplus, owing to improvement in financial flows.
The financial sector remained sound and stable during 2021 with the banking sector, the major provider of financial services, remaining profitable, adequately capitalised with a satisfactory level of liquidity, the BoT had earlier observed.
The number of active accounts in mobile money systems and mobile money agents increased by 42 per cent and 22.9 per cent to 31.5 million and 767,000 up to the start of the new financial year, partly due to interoperability of mobile financial service providers, it added.