GDP grows 5.4 per cent but sectors stutter

Rwanda’s gross domestic product (GDP) grew by 5.4 per cent in the second quarter but saw a decline in some sectors, a report by the National Institute of Statistics of Rwanda (NISR) shows.
The Director-General of the National Institute of Statistics of Rwanda, Yusuf Murangwa (L), explains results of the gross domestic product for the second quarter as Dr Uzziel Ndagi....
The Director-General of the National Institute of Statistics of Rwanda, Yusuf Murangwa (L), explains results of the gross domestic product for the second quarter as Dr Uzziel Ndagi....

Rwanda’s gross domestic product (GDP) grew by 5.4 per cent in the second quarter but saw a decline in some sectors, a report by the National Institute of Statistics of Rwanda (NISR) shows.

The 2016 quarterly report, which closed in June, also put the GDP at current market prices at Rwf1,549 billion, up from Rwf1,428 billion in the same quarter in 2015.

 

The sectors that contributed to the growth, according to the report, includes agriculture, which grew by 3 per cent; services, which registered 9 per cent growth; and tourism (limited to hotels and restaurants), which registered 4 perc ent growth.

 

However, the industrial sector, according to the report registered a -2 per cent growth against a 10 per cent growth rate registered during the same quarter of last year and the previous quarter of this year.

 

According to Yusuf Murangwa, NISR director-general, the drop in the industrial growth was occasioned by the struggling mining and construction sectors, which registered negative growth due to external shocks.

“In agriculture, food crop growth was 4 per cent in 2016 season A, whereby export crops experienced a sharp decline of -23 per cent mainly due to a drop in coffee output (-37 per cent), although tea increased by 4.7 per cent,” he said.

Murangwa explained that the -2 per cent drop in industry sector resulted from poorly performing mining and construction subsectors, which, he said, saw a slump in mining registering -13 per cent and construction activities hovering around -6 per cent.

“The drop in construction appears to be due to big projects that were finalised following significant construction activity in quarter two of the previous year, normally we expect to see a slowdown after very high activity,” Murangwa added.

While completion of major construction projects, like Kigali Convention Centre, Marriott Hotel, roads and other infrastructure are being cited as some of the factors that brought the sector to a standstill in the concluded quarter, officials sounded optimistic on the upcoming quarters.

“Looking at the projects in the pipeline, especially on roads construction in rural areas, industrial parks in Kigali and other projects, we expect growth in the upcoming quarters,” said Dr Uzziel Ndagijimana, the minister of state for economic planning.

The report further stated that service sector was mainly boosted by wholesale and retail trade that grew at 13 per cent and contributed about 12 per cent to the economy, while hotels and restaurants, which are targeted for conference tourism, grew at 13 per cent and contributed 12 per cent to the national economy.

While the general growth of the second quarter is relatively slower compared to the first quarter of the year, which grew by 7.6 per cent, officials said contributing sectors which have not performed well, like mining and construction, will not have bigger impacts on the projected overall economic growth.

“The fact that growth in the second quarter is relatively weaker, does not necessarily mean that there has been a decline, it is a growth still, even though the speed is not the same as the first quarter,” Murangwa said.

Economic growth for 2016 is projected at 6.0 per cent.

According to officials from the Ministry of Finance, the current fluctuations, in terms of GDP growth vis-a-vis the previous quarters, might not see the ministry revise the projections.

Should the country decide to revise projections of the entire economic growth, according to Leonard Rugwabiza, the chief economist at the Ministry of Finance and Economic Planning, changes can only be made after results of the third quarter, which closes this month (September).

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Rugwabiza said changes in GDP's projections could be captured this month. / Timothy Kisambira.

“We have not revised our projections yet; taking quarter 1 and 2, we have got the first half of the year, which is roughly around 6.5 per cent, but we are yet to revise the one we have, which is 6.0 per cent until maybe the end of the year,” Rugwabiza said.

The economy grew by 6.9 per cent in 2015 after a sluggish global economy and lower levels of commodity prices.

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