Rwandan Economy Continues to Surge Despite Export Challenges

By TOP AFRICA NEWS Reporter (info@topafricanews.com)

The Governor of the Central Bank of Rwanda, John Rwangombwa, on Wednesday, September 25, 2024 shared some promising news about the country’s economic performance. According to him, Rwanda has seen significant growth in the past few years, with a strong recovery since 2021. The economy grew by 8.2% in both 2022 and last year, and an impressive 9.8% in the first half of this year.

Rwangombwa pointed out that this growth is driven by all sectors, including services, industry, and agriculture. However, he also highlighted a concerning issue regarding the country’s export sector. Despite the overall economic growth, exports have not been performing well, leading to a widening trade deficit.

“We see imports growing while merchandise exports have reduced, causing our trade deficit to widen,” said Rwangombwa. “The imbalance between our exports and imports is impacting our foreign exchange earnings and foreign exchange markets.”

The Governor attributed the challenges in the export sector to a reduction in commodity prices, particularly affecting traditional exports like coffee. He emphasized the need for Rwanda to diversify its export base to mitigate these risks.

On the exchange rate front, Rwangombwa noted that while depreciation continues to be high, it is lower than the previous year. The country’s official reserves have also increased, providing some stability in financing the trade deficit.

Despite these challenges, Rwangombwa remains optimistic about Rwanda’s economic outlook. He expects the economy to perform much higher than the initial projection of 6.6% growth for 2024.

The Governor of the Central Bank of Rwanda, John Rwangombwa

“We need to continue diversifying our export base and addressing the trade deficit to ensure sustainable economic growth,” said Rwangombwa. “With inflows from tourism, remittances, and foreign direct investment on the rise, we are confident in our ability to overcome these challenges and build a resilient economy.”

As Rwanda continues its economic growth trajectory, it will be crucial for both the government and private sector to work together to address the issues in the export sector and maintain a healthy balance between imports and exports.

Global Economy Remains Stable Around 3%.

Also John Rwangombwa, provided an overview of the global economy and its impact on Rwanda.

He said, the global economy has been stable around 3%, with a slight reduction to 3.2% this year, expected to go back to 3.3% next year.

Rwangombwa highlighted that the global economy has not fully recovered from the shocks of the COVID-19 pandemic and the Russian war, which led to high inflation and tight financial conditions.

However, he noted that most global central banks have started reducing their policy rates, including the U.S., which is expected to continue lowering rates until the end of next year.

The Governor also discussed the impact of commodity prices on inflation, stating that prices have been reducing since last year and are expected to continue decreasing in the coming years.

This trend has led to a decrease in global inflation from 6.7% in 2023 to an expected 5.9% this year, with further reductions to 4.4% projected for next year.

In sub-Saharan Africa, inflation remains in double digits, largely due to the performance of economies such as Nigeria, South Africa, Angola, and Ethiopia.

Despite this, Rwangombwa expressed optimism that financial conditions are starting to ease, leading to a normalization of economic activity.

Overall, the Governor’s message emphasized the importance of monitoring geopolitical challenges that could potentially impact the global economy in the future.

As Rwanda continues to navigate these uncertain times, it will be crucial to stay informed and proactive in addressing any potential risks that may arise.

Rwangombwa reiterated the need for vigilance and cooperation among nations to ensure a stable and sustainable economic recovery in the years to come.