Rwanda’s economic outlook remains promising despite uncertainties in the global economy, the World Bank forecasts indicate, even as the Bank cut the country’s economic growth projections for this year.
According to the figures contained in the Bank’s latest report on Rwanda’s economic outlook, the economy is projected to grow by 7.4 per cent this year, slightly less than forecasts by government and the International Monetary Fund (IMF). However, the bank expects a rebound in economic activity next year with an economic growth rate of 7.7 per cent growth.
Government and IMF projections suggest that the economy will grow by 7.7 per cent this year, compared to 8.6 per cent last year.
“The outlook for agricultural growth remains positive due to ongoing prioritised public investments, which allow for continued realisation of higher productivity in the sector,” the report reads in part.
Growth in trade and retail services is expected to be more buoyant in 2012 and 2013, on account of higher consumption, resulting from increased wages and salaries for public servants projected for the current and the following budget years.
The ongoing public investments in roads and other construction activities are also expected to contribute positively to growth in the construction sector.
The World Bank cautions that services growth is expected to be slightly lower than it was in 2011, as public expenditure-led services are anticipated to experience moderate growth.
Financial sector services are also expected to grow at a slightly slower pace, after experiencing dramatic expansion in the previous year.
Central bank figures presented in the monetary policy and financial stability statement, in the first quarter 2012, services increased by 14 per cent, industry at 1 per cent and agriculture 3 per cent.
The performance of different sectors contributed to an increase of 11 per cent of composite index of economic activities compared to same period last year.
According to the outlook, for the industrial sector is more cautious, as sustaining the growth of the past year requires continued high mineral export prices an unlikely event, given the growth forecasts in industrialized economies.
During the first six months 2012, Rwanda’s mining exports declined by 0.6 per cent and 4.5 per cent in both volumes and value respectively. Revenue collection from mining reduced to US$64.6 million from US$67.7 same period last year.
The report which featured on regional integration noted that intra trade is expected to accelerate over the next years generating more opportunities.
“For Rwanda to become an emerging middle income economy, it will need to unleash its export potential and integrate more with its EAC neigbours,” said Omowunmi Ladipo Rwanda’s World Bank Country manager.
The region’s intra trade however, is challenged by deficient infrastructure networks, high transport costs that undermine the region’s competitiveness.
Other problems mentioned include, inefficient port operations, unnecessary roadblocks and checkpoints and weighbridges along the regional transport routes.
In the first half 2012, total trade with EAC countries increased to US454.62 million as opposed to US$402.05 million same period last year.
“The size of the EAC’s external markets vastly exceeds that of its internal market, but, jointly,EAC partner states are more likely to successfully leverage global demand,” Birgit Hansl Senior Economist said.