GASABO - The good performance of the agricultural sector boosted Rwanda’s real Gross Domestic Product (GDP) from 7.9 percent in 2007 to 11.2 percent last year, the Central Bank said yesterday.
This is the highest economic growth Rwanda has registered in five years, according to a report by the Central Bank. The revelations were made yesterday during the launch of the Monetary Policy and financial stability statement, an event that took place at Prime Holdings.
According to official figures presented by the Governor of the National Bank of Rwanda (BNR), François Kanimba, there was strong recovery in the agriculture sector which bounced back to notch a 15 percent growth last year up from 0.7 percent the previous year.
The good performance of the sector is attributed to the favourable weather conditions experienced countrywide throughout the year.
According to Kanimba, agriculture also greatly benefited from government’s bold move of implementing the green revolution programme.
“This explains good results in food crop production which increased by 16.4 percent,” the monitory policy and financial stability statement reads in part. In non agriculture sectors, there was a noticeable improvement in both industry and service sectors.
Rwanda’s production industry is said to have grown by 10.7 percent, mainly driven by the growth in electricity, gas and water production which registered a combined growth of 16.9 percent.
Construction activities are estimated to have grown by 25.9 percent while the manufacturing sector decreased by four percent.
Statistics also show that the service sector improved, registering growth of 7.9 percent.
This is attributed to the good performance in production of real estate and business which grew by 14.2 percent, finance and insurance 12 percent, transport, storage and communication 11.4 percent. It is also partly due to whole sale and retail trade, restaurants and hotels which grew by 9.4 percent.
The Governor said that Rwanda has experienced high inflationary pressures due to both international and local factors.
Despite reports of high inflation rates last year, Kanimba said that it is stabilising, noting that it has reduced by 0.7 percent between September and December 2008 and 0.2 percent in January 2009.
The governor expressed optimism that Rwanda will maintain its GDP growth in double digits at the same time try to cub inflationary pressure back to a single digit. He however noted that it is a big challenge, given the development level the country is in.
“We are in a growth cycle where we have to agree or accept some trade-off between growth and inflation,” Kanimba said.
He added that, even without any external shocks, a developing country like Rwanda with an ambitious development agenda, inflation is expected to rise because of inflows resulting from the budget support.
On the export side, overseas sales are said to have increased by 37.5 percent increase in value, mainly due to high prices on the international market until September 2008.
Kanimba also noted that the global economic recession has affected some export sectors like the mining industry since the last quarter of 2008.
Despite the good performance of exports, Rwanda’s imports bill increased by 54.2 percent, something which is attributed to the global inflation.
This has as well widened the current account deficit – excluding grants¬ – to 21.3 percent of the GDP in 2008 from 18.8 percent of GDP in the previous year.