The Central Bank Governor, François Kanimba, has said that overall economic growth is expected to grow by between four to five percent, down from earlier projections of 5.3 and 7 percent.
The conservative estimates in the Gross Domestic Product (GDP) growth rates are a result of the slowdown in the manufacturing and service industries.
“The growth we have in 2009 comes from the agriculture sector, very little from the manufacturing sector,” Kanimba told Business Times in an exclusive interview on Wednesday.
In the second quarter of this year, the economy grew by eight percent, largely due to better agricultural output.
Due to the effect of the global recession on the economy, experienced at the beginning of the year Rwanda revised her growth rates downwards to 5.3 percent from 11.2 percent in the previous year.
However, the Governor said that Rwanda has benefited from the recovery in the global economy which is reflected by an increase in commodity prices of exports.
Prices of Rwanda’s major exports like coffee, tea and minerals relatively increased during the second quarter of 2009 but there was a subsequent drop in demand for exports due to the global recession, the Governor said.
The country registered a drop in export value of minerals like cassiterite, niobotantalite, wolframite, and beryl.
However, imports increased by 24 percent in value and volume in the third quarter of 2009 on account of a rise in imports of consumer goods, fuel and capital goods.
“When you compare the total receipts from our exports for the whole year 2009, definitely it will be significantly lower than 2008,” Kanimba noted.
The value of exports (mainly commodity) for this year he said has been declining in the range of 29 percent from January to October compared to the same period last year.
According to the Governor, there has been a significant increase of credit to the private sector where the volume of new loans in the month of November is expected to reach between 15b -20b.
During the first half of this year, credit to the private sector declined by 3.6 percent to Rwf329.4 billion from Rwf341 in the same period last year.
“Banks have been putting in a lot of effort to recover bad loans,” he said, pointing out that the trend in asset deterioration was revised downwards in September.
Looking ahead, Kanimba said he anticipates better performance of the economy as the overall global economic outlook for next year is positive, something that will boost the export sector.
“Next year there should be significant growth because we do expect agriculture to continue doing very well,” he said.