With better performance in service and industry sectors, the National Bank of Rwanda projects high growth with manageable inflation.
“We are very confident that the economy is performing the way we expected it to,” Central bank Governor, Amb. Claver Gatete, said yesterday during a press briefing by the bank’s monetary policy committee.
As of May this year, the non agriculture sector—service and industry—grew by 10.2 per cent compared to 8 percent in the same period last year, he said adding that industry grew by 37 per cent while services by 19.2 per cent.
“The story is very rosy, and very significant, for us it’s a positive sign of growth.”
Early this year government projected Gross Domestic Product (GDP) to rise to 7 percent and inflation not to exceed 7.5 percent.
The monetary policy committee yesterday decided to maintain the key repo rate at 6 per cent to ensure price stability and stimulate lending to the economy.
The current monetary policy is expected to sustain growth at a moderate inflation.
Another positive sign that may lead to high growth is the external sector where exports registered an increase of 47.3 per cent in the first five months of 2011.
“It is the first time to see exports growing by 47.3 per cent in value and of course similar high rate in volumes,” Gatete said.
Rwanda’s exports benefited from the high commodity prices on the international market.
Major commodities exported include coffee, tea and minerals which constitute 70 percent of the Rwandan exports.
The increase in exports, Gatete said, will help cushion the imports that stand at 12.8 per cent in value by 20 per cent compared to last year when the import to export ration was 15.5 percent.
Total loans approved to private sector increased by 13 per cent in the first half of 2011.
Central bank statistics for the first and second quarter show a progress in agriculture with a moderate growth of 5.4 per cent compared to 11.4 per cent last year.
Irish potatoes and cassava showed high yield with an increase of 28.7 per cent and 5.5 percent, respectively.
The Rwanda economy faces a major challenge of a volatile global economy.
“Our view is fuel prices will not continue to rise at their recent pace. But we will have to watch it very carefully.”
Inflation is still moderate at 4.54 per cent, despite the recent pressures from oil and non-oil prices on international and regional markets.