This week’s forecast by the World Trade Organisation (WTO) suggests that global trade will slow down, caused by escalating trade wars especially among big economies, political risks and the volatility in financial markets.
The outlook is the weakest since March 2010 and signals below-trend trade expansion into the first quarter, raising the prospect of a weak global economy.
The weak forecast was based on different indicators, including world merchandise volume, export orders, air freight, container throughput, automobile production, electronic components and agricultural raw materials.
The Governor of the National Bank of Rwanda, John Rwangombwa, said on Thursday that the anticipated slowdown in global trade will not have negative spillover effects on the domestic economy.
“The impact we are seeing is on the prices of oil, commodities are expected to increase slightly, which is positive on our side – it is positive to our trade deficit,” he said at a news conference after the presentation of the monetary policy and financial stability statement.
He, however, added that the specific numbers forecasting the impact of the general global trade slowdown on Rwanda’s economy will be released in March.
Global forecasts show that crude oil prices are expected to decrease by 14.1 per cent in 2019 and by 0.4 per cent in 2020.
Prices of fertilisers, key raw material for many countries, are projected to rise by 2.1 per cent in the same period.
Prices for metals are expected to decrease by 7.4 per cent in 2019.
Agricultural commodity prices are expected to increase by 1.6 per cent in 2019, attributed to rising prices of beverages by 1.5 per cent, coffee Arabic, coffee robust and tea auction prices expected to increase by 1.4 per cent, 1.6 per cent and 1.1 per cent, respectively.
Rwanda’s trade deficit grew by 12.4 per cent in 2018 largely due to the increased importation of capital goods to support the ongoing infrastructure projects.
Such projects include the construction of a peat plant in Southern Province, Bugesera International Airport and different roads, among others.