Rwanda’s economy registered a 7.4 percent Gross Domestic Product (GDP) last year, slightly higher than earlier projection of 7 .2 percent, after recovering from external and domestic shocks that hit the economy in the past two years.
After registering a strong performance in 2008 with 11.6 percent GDP growth, last year the low economic activity slowed down growth to 6 percent. Mid 2009, the dual effects of the global recession and the tight domestic liquidity conditions impacted slowed growth, with the country’s industrial and service sector most severely affected.
“2010 is a year we saw the economy recovering fully from the global financial crisis and the domestic liquidity crunch we had in 2009. This was supported by revival (of the economic activity) across the world,” John Rwangombwa, the Minister of Finance and Economic Planning told a press briefing yesterday while releasing preliminary economic data for last year.
The Minister also underscored that the economy had been largely boosted by a strong performance in the agricultural sector that continues to be the backbone of the economy. The sector expanded by 7.2 percent.
“We maintained the investment in crop intensification program that ensured that more land was consolidated in 2010, more fertilizers were used and at the end of the day we get good performance from agriculture,” he said.
Agriculture continues to benefit from the large investments in fertilizers, improved seeds and extension services under the crop intensification programme that was launched in 2007.
Economic growth was also supported by recovery in the service and industry sector, though growth in industry was relatively lower than expected.
“In 2009 due to the economic downturn we had a slow down in service sector which has been normally the driver of our performance over the years; this is also recovering but Industry did not grow as expected,” he said.
He added that: “We had expected growth of almost above 6 percent but current projections show that we achieved 5.5 percent in industry; this is mainly because recovery in the mining sector was not realized as projected.”
The Minister, however, observed that the service sector is yet to return to double digit growth achieved in the previous years before the crisis.
“But at least we are seeing it reaching 8.1 percent; we see good performance in transport and telecommunication.”
The economy also benefited from the improvement in credit conditions, low inflationary pressures experienced last year, in addition to a relatively stable currency.
“This is the year (2010) that we had the lowest inflation for the past 10 years. We ended the year with 0.23 percent inflation and an annual average of 2.3 percent,” Rwangombwa said.
Credit to the private sector increased by 11 percent last year, well below the 20 percent target for the whole year.
“When you look at the performance in the course of the year, you see growth picking in the last part of 2010 which shows that we expect better performance in 2011.”