Rwanda’s steady growth projected to continue, despite hiccups

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Claver Gatate the Rwandan finance Minister, arrives at parliament to present the Budget Framework Papers

Claver Gatate the Rwandan finance Minister, arrives at parliament to present the Budget Framework Papers

The Rwandan economy is expected to grow by 6% in 2016 and 2017, from 7% in 2015 despite a slight drop in trade coupled with the depreciation of the Rwandan franc against currencies of major regional trading partners.

Recent pressures on Rwandan franc exchange rate have led to a small increase in imported inflation, rising from 1% in November 2015 to 2.3%in February 2016, before a slight uptick in February to 2.9%. Though the exchange rate pass-through is low in Rwanda,

Core inflation saw its three month average decrease from 2.7% in the third quarter to 1.9% in the final quarter in 2015

While inflation continues to remain relatively well contained and has been below the target for more than 2years, averaging 2.5% for 2015,

“Economic performance in fiscal year 2015 was mainly affected by the fall in international prices which affected our exports” said ambassador Claver Gatate the Rwandan finance Minister, while presenting the Budget Framework Papers (BFP) this April 29, 2016

Adding that “government said that adjustment measures being undertaken to address external imbalances in Budget2016”

However, Inflation is projected at 4.7% in 2016 and at or below 5% for the next three years. The projected drop in import prices in foreign currency in 2016 should help mitigate inflation 2016

The temporary moderation in growth reflects lower growth in agriculture (especially export crops). Growth in agriculture was bolstered by particularly strong expansion of export crops production, 13.4%,

The strongest growing subsectors were information and communication, financial and cultural, domestic and other services and none contributed as much as wholesale & retail trade which contributed 0.9% points to overall growth.

BFP is a document outlining government economic policies over medium term. It helps lay foundations of next fiscal budget.

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About the author

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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