Summary: On September 6, 2017, the World Bank published its 10th edition of Rwanda Economic Update titled “Sustaining Growth by Building on Emerging Export Opportunities” in which it indicated that Rwanda’s economic growth has been slowing down since mid-2016 resulting in a 6 percent growth in 2016 and in 4.2 percent annualised growth in the first quarter of 2017. According to the World Bank, this slowdown was mainly due to a combination of the drought, weak export prices and construction activities following the completion of large investment projects in 2016. However, the growth is expected to peak up in the second half of 2017.
Key notes highlighting the growth rate of various sectors:
- The report noted improvement in macroeconomic policy environment in 2017 with inflation decelerating to below 5 percent by June 2017 down from the peak of more than 8 percent recorded in February.
- Regarding the export sector performance, the report noted that exports increased from just $400 million in 2007 to $1.6 billion in 2016 with non-traditional exports having emerged as an important driver of that growth.
- The key outcomes of 2016 and the first quarter of 2017 include the reversal of growing external imbalances and maintaining single-digit inflation amid food price shocks and a sizable exchange rate depreciation.
- With respect to the economy’s production side, the growth in all key economic sectors slowed down. Agriculture grew by 3.9 percent in 2016 compared to 5 percent in 2015 largely reflecting unfavourable weather conditions.
- In the first quarter of 2017, the growth in agriculture further slowed down to 2.6 percent. Growth in the industrial activities slowed to 6.8 percent in 2016 from 8.9 percent in 2015, reflecting weaker performance in construction sector.
- In the first quarter of 2017, manufacturing and mining maintained their annualised growth rate at 6.8 and 7.7 percent respectively, while construction contracted by 0.2 percent following the completion of large investment projects in 2016.
- Growth in services slowed down from 10.4 percent in 2015 to 7.4 percent in 2016 on the back of relatively weak growth in private consumption. The annualised growth rate in services in the first quarter of 2017 was 6 percent.
- Inflation, historically at low single digits, increased to 7.3 percent at the end of 2016 further climbing to 8.1 percent in February 2017 before slowing down to 4.8 percent in June 2017.
- Tourism continued to perform strongly, both in 2016 and in the first quarter of 2017.
The full report (PDF) is available here