Rwanda’s economy is expected to grow by 7.2 per cent in 2018 riding on the services sector, agriculture and a rebound in construction activities, the International Monetary Fund has said.
The economy in 2017 grew by 6.1 per cent surpassing earlier projections of 5.2 per cent.
The projected growth will be largely driven by the services sector with tourism and conferences are expected to act as major drivers.
The growth will also be facilitated by the rebound of the construction sector thanks in part to the ongoing works on the proposed Bugesera International Airport. Works on the $400 million airport are expected to be completed by December 2019.
The projections are also based on expected growth in mineral exports which grew in the last half of 2017.
In 2017, mineral exports grew significantly by over 210 per cent to $248.5 million, compared to $80.1million in the previous year.
“In the services sector, we are looking at strong business tourism in the course of the year with a lot of bookings already made. In industry, we saw an increase in exports in the last half of 2017, particularly mining exports. All these are factors that make us comfortable about the growth rate,” Laura Redifer, the IMF Mission Chief, to a news conference in Kigali yesterday.
There is not much downside risks to the projected growth other than unpredictable weather conditions, insecurity in the region as well as international commodity prices.
The Minister for Finance and Economic Planning, Claver Gatete, said Rwanda being an open economy the Government is closely monitoring international economic trends to assess any emerging risks.
He noted that the government is ambitious on trade prospects, especially given the recently signed African Continental Free Trade Area agreement.
“With the good rains, so far and no drought expected in season B, there is not much risk in this aspect. We are already seeing positive signs, such as the recent signing of the African Continental Free Trade Area framework which could improve trade,” Gatete said.
Gatete said that the government is keen on developing value addition in the agriculture sector to maintain the sector’s contribution to economic growth sustainably.
“We want to have more industries that can add value for us to produce for the country and also export to other markets,” he said.
The growth is set to have positive trickle-down effects such as job creation and increased income for enterprises in sectors driving the economy.
Redifer said that there is likely to be significant job creation in aspects such as agro-processing, Made-in-Rwanda drive as well as service sector.
As a result of the economic growth, the IMF expects a rise in tax revenue. These resources are expected to be used in public spending priorities such as agriculture, healthcare and education among others.