Rwanda Records 10.6 GDP Growth, Narrows Trade Deficit in the First Half of 2018

Rwanda's economy is expected to record improved performance in all sectors in 2018, given a 10.6 percent real GDP growth recorded in the first quarter compared to 1.7 percent of the same quarter in 2017, the Central Bank said in its Monetary Policy and Financial statement revealed on Thursday.

The Central Bank further states that Rwanda's formal trade deficit reduced by 2.0 percent in the first half of 2018 compared to the corresponding period of 2017, from USD 677.86 million to USD 664.21 million. This improvement was driven by a significant increase in formal exports by 23.2 percent while formal imports increased by 7.0 percent.

Total exports increased by 23.2 percent in value, to USD 463.16 million from USD 375.91 million in 2017H1, while the volume increased by 18.4 percent.

The increase in exports value is mainly attributable to the good performance in traditional exports (+28.7 percent), non-traditional exports (+19.1 percent) and re-exports (+22.2 percent), following the increase in international commodity prices.

Traditional exports, which include coffee, tea, minerals, pyrethrum as well as hides and skin, grew by 28.7 percent, amounting to USD 150.29 million in 2018H1 from USD 116.74 million in 2017H1.

This growth is driven by the increase in receipts of mineral exports by 51.9 percent, coffee (33.1 percent) and tea (7.7 percent) mainly driven by increased prices on the account of the continued improvement in global demand.

Compared to 2017H1, coffee exports increased in value by 33.1 percent in 2018H1, from USD 15.86 million in 2017H1 to USD 21.11 million in 2018H1.

As result of external sector's improvement, mainly driven by the rise in international commodity prices, exchange rate pressures remain moderate, with the FRW depreciating by 1.7 percent against the USD by end June 2018.

The financial system also remained safe and sound, with profits of banks, MFIs and insurance companies increasing in the first half of 2018 compared to the first half of 2017. By June 2018, the Capital Adequacy Ratio (CAR) for banks stood at 21.4 percent compared to the 15 percent prudential benchmark. In the same period, the Capital Adequacy Ratio (CAR) for MFIs stood at 32.5 percent, compared to the 15 percent prudential benchmark.

The Monetary Policy and Financial Stability Statement is presented twice a year to highlight the recent economic and financial developments and future prospects thereof.

Read the full Monetary Policy and Financial Stability Statement (2018 Q1) here

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