Short Description: Zanzibar’s economy surges with 6.8% GDP growth in 2025, fueled by a record-breaking tourism recovery and stable, low inflation.
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Main Article:
Zanzibar, Tanzania’s semi-autonomous archipelago, showcased robust economic growth in 2025, with its GDP expanding by an impressive 6.8%. This solid performance builds on 2024’s strength and is primarily driven by the powerful recovery of its tourism sector, which accounts for approximately 30% of the regional economy. With tourist arrivals climbing to over 917,000 visitors and services exports hitting USD 1.5 billion, tourism continues to be the undisputed backbone of Zanzibar’s financial health, driving employment and foreign exchange earnings.
Supporting this expansion is a remarkably stable macroeconomic environment. Inflation developments have been favorable, with annual headline inflation easing to a manageable 3.8% by December 2025. This low and stable inflation bolsters household purchasing power and business confidence. Furthermore, strong private sector activity is evident, supported by a significant 23.5% growth in credit, aligning with mainland Tanzania’s trends and indicating healthy investment and business expansion across construction, trade, and transport sectors.
Looking ahead, Zanzibar’s economic outlook remains positive but highlights an important strategic consideration. While the tourism-led growth model has proven highly successful, the concentration of roughly 30% of GDP in this single sector presents vulnerabilities to global shocks. Future resilience will depend on strategic efforts to diversify the economic base into areas like sustainable agriculture, fisheries, and digital services, ensuring long-term stability alongside continued tourism success.
Short Summary: Zanzibar achieved 6.8% GDP growth in 2025, powered by a strong tourism recovery and stable low inflation. While the outlook remains positive, diversifying beyond tourism is key to sustaining long-term economic resilience and mitigating external risks to the region’s prosperity.
