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World Bank projects Rwanda's economic growth at 7.4% in 2015

Staff writer |
The World Bank projects Rwanda's economic growth rate of 7.4 percent in 2015 and 7.6 percent in 2016, according to the new Rwanda Economic Update (REU) launched in Kigali.

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With the projected growth rates, the World Bank projects Rwanda' s poverty rate to decline from 63 percent in 2011 to 54 percent in 2016, moving approximately one million people above the poverty rate.

Rwanda's growth rate recovered from 4.7 percent in 2013, the lowest growth since 2003, to 7 percent in 2014, the report says.

Private and government consumptions led the recovery, which is reflected in the accelerated growth of the services sector.

However, fiscal policy has become less expansionary in recent quarters.

On the other hand, developments of the monetary sector have been supportive to the economy.

Yoichiro Ishihara, Senior Economist and Task Team Leader of the report said bank lending has recovered to the pre-aid shortfall level.

Analyzing the possible impacts of the oil price decline on Rwanda's economy, the report observed positive impacts in both inflation and imports.

Transportation prices (including gasoline) declined by about 4 percent, which brought down the overall Consumer Price Index (CPI).

On energy imports, prices started to significantly decline in November 2014, resulting in energy import values drop of 20-40 percent until April 2015.

Although Rwanda's GDP investment of 24 percent is slightly higher than the average of low/medium income countries, it is still mostly financed by foreign savings, including aid, it said.

Increasing domestic savings in the next several years is difficult; it is therefore imperative to find alternative domestic and external financing sources, according to the World Bank.

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