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[Rwanda] Weak export prices, drought dip economic growth, World Bank

Rwanda’s economic growth has been slowing down since mid-2016, resulting in a 6 percent growth in 2016 and in 4.2 percent annualized growth in the first quarter of 2017.

The report also noted improvement in macroeconomic policy environment in 2017 with inflation decelerating to below 5 percent by June 2017 down from the peak of more than 8 percent recorded in February. Depreciation of the exchange rate has also alleviated the pressure on foreign exchange reserves and is expected to contribute to the narrowing of external imbalances.

"Although Rwanda’s export sector is still small, the progress made in the past decade sends a clear message that an export-led growth is within reach for Rwanda, and country’s long-term growth strategy should continue to focus on strengthening economy’s capacity to produce exportable goods and services, "said Aghassi Mkrtchyan, World Bank Senior Economist.

To ensure sustainable export growth, the Rwanda Economic Update highlights some policy considerations including maintaining a competitive real exchange rate by avoiding exchange rate mismatch, focusing on agriculture as a strategic sector that provides raw materials for emerging agribusiness, and continued commitment at the regional level to identifice and remove non-tariff barriers within the EAC region.

Returning to a higher growth trajectory in 2018 is achievable, although there are risks, according to the report. In the medium term, economic activity will benefit from the expected recovery of prices of traditional exports, including minerals, tea, and coffee.


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