Rwanda: World Bank Projects Economy to Grow By 7.2%

Farmers sort tomatoes (file photo).
12 December 2018

Rwanda's economy is likely to achieve the projected 7.2 per cent economic growth, the World Bank has said.

In the Group's latest economic update, the World Bank said that with the expansion of the economy at a rapid pace in the first half of the year, Rwanda is well poised to achieve the set projections.

According to World Bank, the growth will be supported by improved agriculture which expanded by 7.6 percent in the first half of 2018 after recovering from recent drought; strong traditional and nontraditional exports, as well as from the resumption of construction activities.

The update also noted improvement in macroeconomic policy environment in 2018 which has served to keep inflation at 1.6 percent and the lowest in East Africa, having dropped from its peak of 7.9 percent in February 2017.

Exchange rate remained relatively stable during the same period.

"While growth momentum continues and the economy will be able to grow between 7 and 8 percent in the medium term, sustaining a high growth rate in the long-run will require large investments in the human capital and more proactive private sector," says Aghassi Mkrtchyan, a World Bank Senior Economist.

He also noted that exports have grown by volume and value which saw the cut the trade deficit by about 14 per cent.

Mkrtchyan however noted that credit growth was however still low as local banks increasingly become risk averse.

The World Bank is also optimistic on growth in the medium term projecting expansion at between 7 per cent and 8 per cent riding on agriculture, exports as well as construction projects.

The Bank however cautioned on risk factors such as weather conditions as well as the uncertainty in the global economy.

The bank also noted that the weak potential of the local private sector and lack of responsiveness as a risk factor.

Rwanda's economic growth exceeded the previously projected 5.2 per cent and grew 6.1 per cent last year.

The economy grew 6.1 per cent in 2017, mostly driven by agriculture, industry, and services.

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