3 October 2018

Rwanda: IMF Confirms 7.2% Economic Growth Rate for Rwanda

Photo: Timothy Kisambira/The New Times
Vendors at a market (file photo).

The International Monetary Fund (IMF) has retained Rwanda's economic growth projection for 2018 at 7.2 per cent, owing to strong industrial activity and favourable rains that are expected to boost agricultural output.

The update follows IMF's review of the economy in which the Fund held discussions with Rwandan government economic policymakers on the tenth and final review of the country's PSI-supported programme. The review run from September 20 through October 2, 2018.

In June this year, the IMF and the World Bank revised their growth estimates for Rwanda to 7.2 per cent attributing it to rains which the institutions said had improved food supply.

In the first quarter of this year, the country posted a 10.6 per cent growth in Gross Domestic Product.

Rwanda is one of Africa's fastest growing economies with economic growth averaging more than 7 per cent every year since 2000.

The head of the IMF team, Laure Redifer, told journalists yesterday that after rising to 6.1 per cent in 2017, real GDP growth averaged 8.6 per cent in the first half of 2018, consistent with the projected end-year growth rate.

"Robust growth in 2018 reflects strong industrial activity, notably construction," she said, adding that inflation remains low, in part, reflecting favourable food prices.

The inflation rate is projected to average 2.8 per cent by the end of the year.

Redifer pointed out that the Government has undertaken policies to improve competitiveness, diversify production, promote exports, and contain imports.

She added that with an export growth rate of 17.9 per cent in the year to August 2018, and import growth of 7.4 per cent, the trade balance has continued to improve.

"While export growth is expected to remain robust, the construction of Bugesera airport and a pickup in foreign-financed investment are expected to fuel imports, notably of capital goods, and is expected to lead to a rise in the trade deficit in 2018," she said.

The IMF expects the inflation rate to slow down to 2.8 per cent from 4.5 per cent on improving food supply and a stable exchange rate.

Risks to the $8.4 billion economy include unpredictable weather, adverse regional politics and a small production and export base that remains vulnerable to shocks, Redifer said.

In June, the IMF said that expected the inflation rate to slow down to 2.8 per cent from 4.5 per cent on improving food supply and a stable exchange rate.

It also pointed out that risks to the $8.4 billion economy include unpredictable weather, adverse regional politics and a small production and export base that remains vulnerable to shocks.

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