The Governor of the National Bank of Rwanda (BNR), John Rwangombwa, has expressed optimism about the country's economic growth outlook for 2024 and 2025, despite persistent stagnation in the global economy.

Rwanda’s economy grew by an average of 9.2 per cent over the first three quarters of 2024.

Growth was particularly strong in the first two quarters, at 9.7 per cent and 9.8 per cent, respectively, before moderating to 8.1 per cent in the third quarter, according to the National Institute of Statistics Rwanda (NISR).

This robust performance, Rwangombwa noted, was largely driven by continued expansion in services and industry – particularly construction, manufacturing, and mining.

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The Composite Index of Economic Activities (CIEA), a key indicator of short-term economic trends, suggests that fourth-quarter growth remains strong at 15.7 per cent.

"We expect this growth momentum to continue, and it is highly likely that the original 2024 projection of 8.3 per cent will be surpassed,” Rwangombwa said during a press briefing on Thursday, February 13.

Globally, economic growth has stagnated over the past three years. The global economy expanded by 3.2 per cent in 2024 and is projected to remain nearly flat at 3.3 per cent in both 2025 and 2026.

Similarly, Sub-Saharan Africa’s economy grew from 3.8 per cent in 2024 and is expected to stabilise at 4.2 per cent in 2025 and 2026, according to the International Monetary Fund (IMF).

With its strong performance, Rwanda remains one of the fastest-growing economies in the region.

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Inflation developments

The governor, who was presenting the outcomes from the Monetary Policy Committee (MPC) meeting, indicated that the central bank’s fight to stabilise inflation has kept consumer prices within its target range of 2 per cent to 8 per cent.

"We saw that the speed at which prices were increasing really reduced and inflation remained within our band,” he said. "This was driven by good performance of agriculture in 2024 and the normalisation of global trade and the reduction of global inflation.”

Headline inflation increased to 5.2 per cent in quarter four, slightly from 4.1 per cent in quarter three.

The governor attributed this short term increase mainly to unfavorable weather conditions that delayed agriculture produce and affected overall agriculture performance in Season A.

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In January, headline inflation increased further to 7.4 per cent, mainly linked to higher food prices. Prices of foodstuff and non-alcoholic beverages increased by 7.2 per cent, according to NISR data.

In the same period, prices of milk, cheese, and eggs increased by 9.6 per cent, while vegetables prices rose by 7.4 per cent.

Meat prices increased the most during the period under review at 30.7 per cent, a continuation from December when it had increased by 25.4 per cent. The slight increase was due to the zero-grazing policy, which prioritises milk production by limiting the number of cows being slaughtered.

In the last MPC round, the central bank projected inflation to average 5.8 per cent in 2025. However, based on current macroeconomic data, this forecast has been revised upward.

"Inflation is expected to remain within the target range, averaging 6.5 per cent in 2025 and 4.1 per cent in 2026,” the governor said. He also warned of potential risks to this outlook, including geopolitical tensions and adverse weather conditions.

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In response to these developments, the MPC decided to maintain the central bank’s policy rate at 6.5 per cent, keeping it unchanged for the third time in a row since August last year.

The central bank’s decision to keep its policy rate at 6.5 per cent – the rate at which it lends to commercial banks –is based on expectations that inflation will remain within its target range in 2025.

"We are confident that at this rate, we will keep inflation within the policy band of 2 per cent to 8 per cent over the medium term,” the governor added.