Rwanda’s economy grew by 7.3 per cent in the first quarter of 2016, down from 7.6 per cent same period last year.

According to a new report by the National Institute of Statistics of Rwanda (NISR), released yesterday, the country’s Gross Domestic Product (GDP) increased to Rwf1.5 trillion, up from Rwf1.3 trillion.

The current performance, according to the experts, is a manifestation of government’s efforts to ensure economic sustainability amidst global financial meltdown.

Despite registering a 6.9 per cent economic growth rate in 2015, both the World Bank Group and the International Monetary fund (IMF) have already revised downwards the country’s growth prospects on account of the slowdown of the Chinese and European economies, and decline in international commodity prices, particularly oil and minerals.

According to the World Bank, Rwanda’s economy is projected to grow by 6.8 per cent this year and 7.2 per cent in 2017.

Equally, the IMF predicts that the economy will slow down from 6.9 per cent growth registered last year to 6 per cent for two years as a result of shocks in 2016/17, before picking up in 2018.

However, with the first quarter figures looking promising, experts are confident the country could perform better than expected by the end of the year.

Sector performance

Meanwhile, latest figures indicate that the services sector continues to steer the economy by contributing 46 per cent of GDP, followed by the agriculture sector with 33 per cent during the first quarter of 2016, up from 31 per cent in the same period last year.

"The industry sector contributed 15 per cent of the GDP and 6 per cent was attributed to adjustment for taxes and subsidies on products,” Yusuf Murangwa, the NISR’s Director General, said while presenting the figures at a joint media conference with the Minister for Finance and Economic Planning, Claver Gatete.

Murangwa is confident and optimistic about the current growth registered across the various sectors.

In the first quarter, agriculture grew by 7 per cent, up from 5 per cent and contributed 2.1 percentage points to the overall GDP growth.

Equally, activities in the industry sector grew by 10 per cent and contributed at least 1.5 per centage points.

The service sector increased by 7 per cent and contributed 3.4 percentage points to GDP growth, and again served as the spring board for other sectors to grow and thrive.

"For example, when you look at the agriculture sector, growth was mainly driven by increasing exports which grew 86 per cent mainly by boosted by coffee and tea; equally, industrial growth was enhanced by the massive ongoing construction activities across the country,” Murangwa explained.

Meanwhile, he told The New Times that total expenditure during this period final consumption expenditure increased to 76 per cent of the GDP, up from 75 per cent registered in the same period in 2015.

This puts the country’s gross fixed capital formation (the net amount of fixed capital accumulation) at about 29 per cent of GDP, up from 27 per cent registered last year.

Overall, this reflects an increase in the purchasing power and expenditure from both government and citizensAllan Gichuhi, the local Ernest & Young Managing Partner, has already voiced the need to encourage consumption of locally manufactured products to keep the economy competitive.

It is obvious that more purchasing power could actually mean more revenue which the government needs to finance its recently announced Rwf1, 949.4 billion Budget to be largely funded domestically.

According to Gatete, the Government will finance 62 per cent of the Budget through domestic avenues, amounting to Rwf1.216 trillion, an increase of Rwf40.9 billion compared to the previous Budget.

The remainder of the Budget will be funded through external resources, worth Rwf733 billion.

Gatete, yesterday, emphasised the need to increase production and value addition to sustain economic growth.

He said both the government and its stakeholders will revise the projections depending on how the country performs in the second quarter.

editorial@newtimes.co.rw