Global shocks and their impact on the Tanzanian economy

Abstract

Plummeting commodity prices, China's economic slowdown and rebalancing, and global financial market turbulence have recently raised concerns about their effects on African economies. This paper investigates whether, and to what extent, these intertwined shocks spillover into the Tanzanian economy. The author finds that a 1 percentage point (ppts) drop in China's investment growth is associated with a decline in Tanzania's export growth of roughly 0.60 ppts. A 1 percent fall in commodity prices leads to 0.65 percent lower exports value. The results suggest that a hard landing of the Chinese economy to its 'new normal' would doubtless send shock waves through the Tanzanian economy by further driving down commodity demand and prices as well as lowering development finance. In contrast, financial market volatility has a fairly negligible impact on economic growth. The main results stand up well to a wide-array of robustness checks. JEL C32 F4 O11

Chad Growth and DiversificationLeveraging Export Diversification to Foster Growth

“…1.5 Simulating Policy scenarios for Diversification 1.5.1 Explaining determinants of economic growth in Chad (1990Chad ( -2015 14 12 The sample of African countries studied in McMillan et al (2014) includes nine--mostly English speaking--countries: Ethiopia, Ghana, Kenya, Malawi, Mauritious, Nigeria, Senegal, South Africa and Zambia. Our findings, however, corroborate those for other African countries that also differ from the seemingly representative African regional pattern, including Nigeria and Zambia (for certain sub-periods), Tanzania (Haile, 2016) and Niger (Daki and Lopez-Calix,2017). 13 The results for Chad are not exactly comparable to those of the regions because we applied a slightly different base period and per-capita figures when computing the decomposition used in McMillan et al (2014).…”

“…Despite some unexplained growth in the 2000s, the model generally performs satisfactorily in terms of tracking the actual growth performance, indicating its relevance in understanding long-run growth dynamics in Chad (see Figure 1.12). 15 We use the growth regression model in Brueckner (2014) which has been previously used to explain long-term economic growth elsewhere (see Araujo et al (2014), Moller and Wacker (2017), and Haile (2016) for applications in the context of Latin American countries, Ethiopia, and Tanzania, respectively). In order to shed light on recent developments in Chad, we extended Brueckner's (2014) dataset by one additional five-year period, namely 2010-2015, based on consistent data sources.…”

“…The analysis mainly uses the cross-country growth regression model in Brueckner(2014). SeeAraujo et al (2014),Moller and Wacker (2015), andHaile (2016) for applications in the context of Latin America, Tanzania, and Ethiopia, respectively. 21 An important caveat in this exercise is to acknowledge that the "trade openness ratio" is used as a proxy for export diversification, but the latter cannot be the only reason for its increase.…”

Leveraging Export Diversification in Fragile Countries: The Emerging Value Chains of Mali, Chad, Niger, and Guinea

“…The analysis mainly uses the cross-country growth regression model in Brueckner (2014). See Araujo et al (2016), Moller and Wacker (2015), and Haile (2016) for applications in the context of Latin America, Tanzania, and Ethiopia, respectively. 6.…”

China's Impact on Mongolian Exchange Rate

“…Recently, applying the models, Owyong, Wong & Horowitz (2015) study the cointegration and lead-lag effects between offshore and onshore spot and forward markets. Haile (2017) employs the cointegrated VAR model to investigate whether and to what degree China economic slowdown is, decline in commodity prices and volatile financial markets could affect Tanzanian economy. He finds that a 1 percentage decline in China's investment growth leads to 0.57 percentage decline in Tanzania's export growth.…”