Rwanda’s trade deficit for formal goods decreased by over 10.5 per cent year-on-year in March, but was up on a monthly basis, the National Institute of Statistics of Rwanda (NISR) Formal External Trade in Goods report for March 2017 indicates.
According to the report released on Monday, the country’s formal trade in goods deficit narrowed by 10.51 per cent in March compared to the same period last year. However, it was recorded at $102.22 million (about Rwf856.86 billion) in value over the reporting period, an increase of 34.61 per cent compared to the month of February. Trade deficit is the difference in value between the imports and exports and are often used as a measure of a country’s external trade performance.
The country’s export value rose by 39.56 per cent in March, but was up by a lower margin of 23.40 per cent on a yearly basis, NISR indicates. The import bill increased at lower percentage of 29.68 per cent compared to February 2017, and dropped 1.08 per cent compared to March 2016, according to the report.
Experts attribute the mismatch between imports and exports to continued reliance on low-value export products that are also vulnerable to international market dynamics and commodity price fluctuations. The demand for foreign goods is also growing, especially for capital and intermediate goods to sustain the ongoing economic development and help the country to achieve a 11.5 per cent growth rate envisaged under the second Economic Development and Poverty Reduction Strategy (EDPRS II). It is this expenditure that has ballooned the country’s import bill.
However, the Minister for Finance and Economic Planning Amb Claver Gatete said initiatives like the Made-in-Rwanda campaign and industrial parks could soon help increase domestic production and export volumes and value and hence improve trade balance receipts.
Speaking to The New Times, Gatete cited increased local production of rice, wheat and sugar that contribute highly to the import bill, adding that this will help improve the country’s trade books. The country’s total trade amounted to $570.11 million during the last quarter of 2016, a decrease of almost 7.40 per cent year-on-year. Exports during this period totaled to $109.50 million, with import bill increasing to $400.31 million.
Experts are confident the country’s economy will rebound this year. The International Monetary Fund (IMF) has already projected that Rwanda’s economy will expand by 6.2 per cent in 2017, recovering from a slight dip in growth of 5.9 per cent last year.
The Fund, in its second review of Rwanda’s Policy Support Instrument, said growth would be largely driven by recovery of the agricultural sector, growth in exports and reduction in the trade deficit this year.
“We are already seeing positive results and are optimistic on commodity prices which will drive economic growth this year,” John Rwangombwa the Central Bank governor added on Monday.
Last week, Ed Kostenski, the founder and president of Nationwide Group, urged government to inject more resources into sectors that were affected by the fall of international commodity prices last year, arguing that the prices were expected to recover this year.
Meanwhile, Rwanda’s re-exports values decreased by 5.73 per cent in March compared to February 2017, but were up by over 13.5 per cent on a yearly basis.