Trade Deficit widens by 17.4 percent

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m_Trade Deficit widens by 17

Trucks full of merchandise unloading in Kigali’s business district: The country’s trade deficit widened in the first half of 2014

The country’s trade deficit has continued to widen in the first half of the year compared to the   same period last year.

The trade deficit widened by 17.4 percent to $898.6 million up from $765.4 million with the export cover of imports falling to 24.6 percent from 27.5 percent in the first half of last year.

“In the first half of 2014, total exports increased by 1.2 percent in value, while imports value increased by 13.0 percent,” said John Rwangombwa, the Governor of the Central bank while presenting the  monetary  policy and financial stability statement  for the first half of the year.

Whilst, the country’s imports CIF value recorded an increase of 13.0 percent and 0.9 percent in volume compared to the first half of 2013 with  an  increase  in  consumer goods +0.8 percent,   capital goods +17.7 percent, which resulted into an increase in the volume of imports.

But import of intermediary goods declined by 1.3 percent in the first half of this year.

“ The increase in consumer goods was due to high imports volume of sugar and sweets which increased by 51.2 percent due to low domestic production, decreased by 9.2 percent  in the first half of 2014, as KABUYE SUGAR WORKS closes during the second quarter for maintenance of machinery,”  he said

On the other hand, export volume registered a  decline  by  31.2 percent  which resulted from the  bad weather mainly  rainfall  shortage  in the fourth  quarter of  last year which  lowered  the volumes in the  forts half of 2014.

But Non-traditional exports registered an increase in valu4e of 10.9 percent mainly from manufactured and agriculture products exported to the neighboring countries with most of these export going to DRC   while hand crafts went to international markets.

Whilst, re-exports registered an increase in value by 47.4 percent as result of petroleum products such as Jet Air and other petroleum re-exports as well as vehicles re-exported to eastern DRC.

“Rwanda’s formal exports sector was dominated by non-traditional exports and re-exports with a share of50.8% in total exports compared to 49.2% for traditional exports,” the statement noted

The country’s traditional exports   registered a decline in   both value and volume by 18.8 percent with coffee contributing to 8.9 percent, tea 19.7 percent, minerals  64.7 percent, hides and skins 5.8 percent and pyrethrum (1.0 percent among others while non-traditional exports and re-exports increased in value by 10.9 percent and 47.4 percent respectively.

The decline in tea prices from USD 2.85/Kg in January to USD 2.12/Kg in June 2014, led to the contraction of the value of tea exports by 10.2percent in value despite an increase of 5.1 percent in volume,” the statement read

Again, the price of coffee fell by 8 percent in the first half of this year to $2.68 from $2.92 in compared to the same period of 2013, while increased in volume by 14.2 percent but decreased by 18.6 percent in value mainly due to the fall of price of coltan which is the main contributor in value of exports by -30.5 percent.

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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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