Rwanda’s exports grew by 58.8 per cent in the third quarter of 2021 driven by factors including rising commodity prices, good performance of domestic manufacturing activities as well as the blossoming horticulture, as outlined by Central Bank.

This was announced following the quarterly Monetary Policy Committee meeting of the Central Bank. The committee meets quarterly to assess economic trends and ideal approaches to maintain economic stability.

The committee noted that in the third quarter, exports grew by 58.8 per cent compared to the same period last year with growth in traditional exports by 43.1 per cent (coffee, tea, minerals) and 47.5% growth in non-traditional exports (manufactured products and horticulture).

Imports into Rwanda grew by 12.7 per cent which was largely driven by increased cost of oil prices by about 75 per cent. Imports of intermediate goods used in manufacturing grew by 7 per cent.

Crude oil prices have been rising steeply globally to surpass pre-covid-19 levels by about 69.5 per cent and are expected to exert pressure on Rwanda’s inflation which is currently quite low at 0.6 per cent from about 0.7 per cent recorded in the second quarter of 2021.

Thierry Kalisa  the Chief Economist at the Central Bank noted that fuel prices are further expected to rise in the coming months but noted with the current low base of inflation, it is projected to end the year at 0.7 per cent and 5.4 per cent in 2022.

"We know it is going to increase and can expect that it will increase up to about the second half of next year. Inflation is currently low, this will put pressure on our import component, it will influence inflation in 2022, that is how it gets to 5.4 per cent in 2022,” he said.

With fuel prices increasing globally to surpass pre-covid-19 levels, the government in October adjusted its fuel subsidy intervention to cushion Rwandan consumers against increased cost of living.

With that, diesel prices remained unchanged at Rwf 1054 per litre while Petrol prices rose to Rwf 1143 per litre from Rwf1,088.

Soraya Hakuziyaremye the Deputy Governor of the Central Bank noted that the subsidies had played a huge role in keeping inflation low to allow economic recovery.

She said that with crude oil prices rising by by about 70 per cent globally, it would have had an adverse effect on inflation rates and economic recovery without the subsidies.

The rising fuel prices globally has been cited as a significant risk to the East African Region’s economic recovery by the African Development Bank.

The AfDB noted that fuel prices remain a major risk to the economic recovery with forecasts projecting a consistent increase in global oil prices from $41 a barrel in 2020 to $65 a barrel in 2021 and $66 a barrel in 2022.

With the continued economic recovery characterized by a GDP growth of 20.6 per cent recorded in the second quarter of 2021, Central Bank Governor John Rwangombwa  said that growth is expected to continue for the third quarter.

In the coming week, the government is expected to revise economic growth projections which are currently at 5.1 per cent.

 Considering the low inflation and growth trends the Central Bank decided to maintain an accommodative monetary policy stance by keeping the Key Repo Rate at 4.5 percent to continue supporting the economic recovery efforts.

Maintaining its key repo rate at 4.5 per cent, is a signal to encourage continued lending to the private sector by banks to support economic recovery following the Covid-19 pandemic.

The key repo rate is the maximum rate at which commercial banks invest their money at the central bank. Keeping it low makes it ideal for banks to lend to the private sector as opposed to investing it with the Central Bank.