Rwanda Economic Outlook
- Real GDP grew by an average of 6.9% during the first three quarters of 2015, in line with the 7.0% target for 2015. It is projected to decrease to 6.8% this year before going back up to 7.2% in 2017.
- The indicators for rule of law, political rights and civil liberties, participation and inclusiveness, and safety and security have all improved.
- With urbanisation an emerging priority, measures are being implemented to position Kigali as a centre for investment and business growth. There is also a focus on promoting balanced and transformative urbanisation through the development of secondary cities.
Real GDP grew by an average of 6.9% in the first three quarters of 2015, lower than the 7.2% average recorded during the same period in 2014. However, the 6.9% rate is in line with the 7.0% target for 2015. The services and industry sectors led the expansion during this period. Growth in the agriculture sector, however, was moderate in part due to fluctuations in weather conditions. For 2016 and 2017, sustained investments to address energy and transport infrastructure constraints, continued progression in industry and a recovery in services are expected to lead growth. Agriculture is projected to grow at a moderate rate.
Headline inflation is projected to remain below the central bank’s medium-term target in 2016 and 2017. Inflationary pressures are expected to remain subdued due to low fuel and food prices. Strong demand for capital, intermediate goods and fuel products is projected to persist in the short to medium term in line with the public investment programme. Current account deficits are expected to remain high in the near term as export receipts continue to account for only 25% of imports.
Rwanda’s urban population accounted for 28.0% of its total population in 2014, which is lower than the sub-Saharan Africa (SSA) and global averages of 37.0% and 53.0% respectively. However, the 5.9% annual urbanisation rate exceeds the averages of 4.2% and 2.1% for SSA and the world respectively. This calls for an integrated urban/rural development approach to ensure sustainability and to link urban development objectives with other goals, notably socio-economic transformation. Implementation of the Urbanization and Rural Settlement Strategy (2013-18) is underway. This strategy focuses on two objectives. The first objective is to enhance Kigali’s development and provide urban planning and management support to the districts. The second objective relates to the creation of balanced urbanisation for economic inclusion and transformation. In this regard, six secondary cities are at various levels of development, the goal being to transform budding trade and transport centres into regional growth poles. Achieving these objectives is expected to increase the urbanisation rate to 35.0% by 2020.