Rwanda’s economy last year grew by six percent, according to a monetary policy review statement released by the National Bank of Rwanda (BNR).
That growth rate reflects a 0.5 percent rise on the previous year’s real Gross Domestic Product (GDP) growth rate.
The growth has largely been attributed to good performance of the industrial sector that recorded a real GDP growth rate of 12.5 percent compared to 8.5 percent in 2006.
The construction and public works sector also experienced a boom last year, growing to 15.2 percent up from 5.2 in 2006, while the services sector grew by 9.2% up from 8.1% in 2006.
Another factor behind the growth, according to the central bank, was the good performance of the Rwandan Franc.
Francois Kanimba, the central bank governor, said the Franc appreciated in nominal terms by 0.09 percent against the dollar between December 2006 and December 2007. The stability of the Franc was backed by increment of foreign currency inflows to the country’s banking system.
These inflows primarily came from donor budget support, development projects and private transfers.
Kanimba further said that the economy would have registered an even higher growth rate but was slowed down by the agriculture sector, which he said registered a negative real GDP growth rate.
Value addition to the agriculture sector is estimated to have reduced by negative 2.9 per cent from 1.1 per cent in 2006 to negative 1.8 percent last year.
Kanimba attributed the decline to the delay of rains in 2007, which resulted in low crop harvest in several parts of the country.
But despite the general economic growth, the statement shows that underlying inflation rose from 6.1 percent in 2006 to 10.6 percent in 2007.
BNR attributes that to the rise of the prices of fresh products and energy prices, which rose significantly last year.
On annual average, it passed to 9.1 percent failing to reach the low target of 5 per cent
This year government aims at keeping the growth rate between 5.5 percent and 6.5 percent. A moderate inflation of 7 per cent is also anticipated.
‘Consolidation of our achievements as regards macro-economic and financial stability will remain a major concern for the monetary policy and related activities to be implemented by BNR in 2008,’ the statement reads.
However, the governor said that the monetary management in 2008 is already faced with challenges which will likely exacerbate inflationary pressure.
These challenges include the rise in oil prices and the potential impact of the recent political and socio-economic crisis in Kenya, the statement indicated.