Forecasting Tanzania GDP per Capita, 2013 – 2021

Abstract

This study forecasts standard of living in Tanzania over the next ten years as measured by the ratio of two rates: (1) economic growth, using real gross domestic product (GDP), to (2) population growth. GDP alone is an insufficient measure of a nation’s well-being. China and India, for example, have high levels of GDP, but the pie is sliced very thin to be shared among the billions of people who live in those two countries. Real GDP per capita measures not only the level of economic activity but also the number of people who must share in the results of that activity. This study uses historical data for Tanzania’s real GDP (i.e., adjusted for inflation) and population to observe the ratio over time (from 1960 to 2011). One discovery is that of a point of inflection at the end of the 20th century, such that GDP per capita rose at an annual rate of just one percent “pre-inflection” and four times that rate “post-inflection.” The study uses standard statistical methods to forecast the variables over the next ten years. Results of the forecast indicate that GDP will continue to grow at a faster rate than will population, with a consequent steady rise in the average standard of living. How the increased prosperity will be distributed, so as to reduce the level of poverty and the disparity of income, remains to be seen.