National Bank sees 2014 Economic Growth above Expectations

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National Bank sees 2014 Economic Growth above Expectations

Rwanda’s economic growth will be faster-than-expected this year and accelerate further in 2015 as low interest rates help spur investment by private industry, central bank Chief Economist Thomas Kigabo has said.

The economy is forecast to expand 7 percent next year from 6.8 percent in 2014, up from an earlier projection of 6 percent, Kigabo said in an interview.

Annual inflation is expected to remain below 5 percent next year helped by sliding prices for oil, he said today.

“Looking at the external factors that affect the economy we see less pressure next year,” he said. “The recovery of the global economy, the falling of fuel prices on the international market, we don’t see any pressures” on inflation, he said.

Policy makers in the country lowered the central bank’s benchmark interest rate for the first in a year in June, cutting it by half a percentage point to 6.5 percent, where it was held at the last meeting in September.

Rwanda has a $7.5 billion economy of 12 million people that are mainly dependent on farming of crops including tea and coffee to generate about a third of the gross domestic product and 70 percent of export earnings.

Rwandan urban inflation accelerated to 0.5 percent in October from 0.2 percent in September. The inflation rate this year is unlikely to exceed 3 percent, said Kigabo.

Monetary policy will remain “accommodative” as long as inflation pressures are contained, Bank of Rwanda Governor John Rwangombwa said.

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Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

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