Rwanda’s economy is expected to grow higher than the initial projection of 6 per cent in 2024, John Rwangombwa, Governor of National Bank of Rwanda (NBR) has said.

He was presenting the Monetary Policy and Financial Stability Statement (MPFSS) - which assesses the economic performance for the first half of the year and projections for the rest of the year - to the general public on September 25.

This is consistent with the World Bank projections which indicated that Rwanda's economy is projected to average 7.6 per cent in 2024-2026, supported by private investment, tourism, and favorable agricultural conditions.

Rwanda’s economy recorded strong growth in the first half of the year at 9.8 per cent, up from 7.7 per cent registered during the same period of 2023. The growth was mainly driven by service, industry, and agriculture sectors.

"We expect the performance of our economy to be higher than the initially projected 6 per cent, driven by all sectors,” Rwangombwa said.

He, however, noted that the only challenge is that the growth is not reflected in the export and exchange market, whereby the trade deficit gap increased by 9.6 per cent.

This stems from the reduction of merchandise exports to -0.9 per cent while merchandise imports increased by 5.7 per cent.

This contributed to depreciation on exchange market which increased by 3.7 percent in the first half of the year, however tourism revenue and foreign direct investment (FDIs) continued to finance the market, he said.

Impact of monetary policy decision

The monetary policy decision taken in the first half of the year saw the Interbank rate increase by 8.2 percent before easing to 7.3 percent that aligned with the reverse repo decision of 6.5 percent, taken by NBR in August.

Rwangombwa noted that the lending rate which stood at 15.6 per cent cannot be attributed directly to the monetary policy decision.

The decision of loose monetary policy was taken in the wake of easing of commodity prices on the market. Inflation rose to 5 per cent in August.

At the global scene, most central banks have started to ease their monetary policies, following the decline in commodity prices of energy and non-energy commodities, and the trend is expected to continue over the next years.

The Governor explained that inflation is expected to average around 5 per cent throughout 2024 and 2025. However, it might change as the impact of risks of escalation of global geopolitical tensions and weather-related challenges, NBR cautioned.