The economies of Uganda and Rwanda have survived much of the trouble of the Eurozone crisis, but Tanzania has not been that lucky, according to a new report.
The report titled, “Shock Watch Bulletin: Monitoring the impact of the Eurozone crisis, China/India Slowdown, and energy price shocks on lower-income countries,” shows that Tanzania faces the highest exposure to economic troubles in the Eurozone and slower growth in China, while Uganda and Rwanda are the least exposed among the East African Community (EAC) states.
Published by the London-based Overseas Development Institute, it notes that Uganda and Rwanda bear low exposure to external risks due to limited trade with Eurozone economies and much of Asia.
Fairly healthy reserves and external debt portfolios also influenced Uganda and Rwanda’s positive rating, according to the report. “Considerable exports of precious metals like gold and diamond to European markets and high revenues from tourism are a big contributor to Tanzania’s economy but could harm its growth prospects at a time of economic decline in Europe,” the report notes.
“This, combined with rising trade with China, backed by mineral products, has rendered Tanzania most prone to external economic and financial shocks”.
Statistics from the report indicate that Tanzania’s exports rose by 13 per cent to $7.99bn in 2011. External trade and financial risks highlighted in the report also raise questions about the role of risk monitoring tools in the region’s financial and trade sectors.