One such organization, an international investment and financing advisory, said the rate of growth in the country was likely to reach 5.6 per cent, while admitting that the World Bank and the International Monetary Fund project growth prospects of upwards of six percent.
In that sense there is no reason to believe that the 5.6 per cent figure isn’t disputable but it may be closer to reality; IMF-WB are close to governments.
There are two distinctive situations in which growth may decline, one is a situation of bust where one sector has expanded far beyond realistic economic capacity, and investors in that sector start selling off when they see profit prospects plummeting.
Such a situation has then a contagious effect as the principal banks lending to that sector find themselves awash with nearly worthless property in terms of quick sale at prevailing market rates if everyone starts selling in a panic.
A wide ranging economic crisis is then in the course of unfolding, since plenty of correction has to take place on what each sector is worth, by new figures – and indeed, what the currency is worth.
That is largely what happened in the United States and then in global economy by contagion and direct implication in 2007 and its repercussions felt long into the next decade, helping to lay the basis for new economic orientations in a number of developed countries.
It was also at that time that China shifted its growth prospects downwards, rapidly abandoned two digit growth as it was totally inconsistent with sharp reduction in import capacities in the United States following the housing sector crisis and bank sector meltdown that followed.
China reacted to the crisis elsewhere to bring down growth prospects, while in Tanzania governance initiatives are revamping growth.
A change of focus in the economy is ongoing and its proper effect, how satisfactory they are or unsatisfactory, will be ascertained at least by the next general elections, but at present there is a sort of transition period.
Public sector consumption took a relatively large chunk in growth figures of the earlier period, and private consumption was by all indications rising, with low inflation and a stable currency, though permanently declining against the dollar.
Now there is a screeching stop to galloping public sector consumption, a heavy reorganization of government relations with the commercial banks, and greater investments into social capital goods, rapidly.
What can’t be quickly predicted at the moment is how far current changes – government ability to deliver in solving pernicious public sector challenges by fiat from State House for instance - shall translate into higher economic growth, and in what timeframe.
Still it is evident a new balance is being cultivated at the macroeconomic level, as speculative investments decline (and their onerous focus on urban consumption) and slow take up of less profitable ventures that are more satisfactory to wider public needs, like self-contained apartment units instead of hotels in each neighborhood.
Readjustment at sector and individual level doesn’t mean serious decline, as by comparison with China, 7.1 per cent growth in our circumstances was already too high flung.
The reason that 7.1 or 7.0 per cent rates of growth that we were used to were still too high is something of a ‘dependency’ anomaly, that while China grew rapidly depending on exports to the United States (as its ‘urban’ centre while China as a whole become a ‘rural’ and semi-urban area) here urban centres shouldered exponential growth by gross misuse of public resources.
Now with governmental adjustment to remove wasteful expenditure, the same effect is being seen, where overall growth suffers or is readjusted, laying foundations for healthier economic growth that is more balanced socially and in gross capital formation.
So, there is a positive story about economic growth which isn’t being noticed in the figures, which was predictable anyway.
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