Economy rebounds, posts 7.4% growth

The economy has defied the odds to grow by 7.4 per cent in the first quarter of the year, a huge rebound from 4.7 per cent over the same period last year, the National Institute of Statistics of Rwanda quarterly GDP (Gross Domestic Product) report shows. Last year, economic growth slowed to 4.6 per cent from 7.5 per cent in 2012, creating uncertainty among experts and stakeholders on whether the economy was strong enough. Last year, government also launched an ambitious growth blueprint the second Economic Development and Poverty Reduction Strategy (EDPRS II), targeting an annual growth rate of 11.5 per cent over the next five years. The rebound has raised optimism among economists in the country that struggled under the weight of aid cuts last year. GDP per capita (purchasing power per person) also improved to $693 (about Rwf483,714) compared to $681 (about Rwf475,338) during 2013. The main drive of growth during the first quarter was the services sector, which contributed 48 per cent of the total GDP. Agriculture sector, the backbone of the economy, added 32 per cent of the GDP, while the industry contribution of 5 per cent was registered from the adjustments of taxes and subsidies on products. Growth rate by kind of activity According to the NISR report, the agriculture sector grew by 5 per cent and contributed 1.7 percentage points to GDP growth, while the industrial sector expanded by 9 per cent, a decline from 13 per cent last year, contributing 1.4 percentage points to the overall basket. The service sector increased by 8 per cent compared to 4 per cent in the first quarter of 2013, bringing in four percentage points to the national economy. More growth was also noticed in trade and transport sectors which registered 11 per cent growth compared to 5 per cent during same period in 2013. Real estate registered a 9 per cent growth compared to -3 per cent during the same period last year, while financial service sector slowed to 4 per cent from 15 per cent during 2013. What the rebound in growth means Economists say registering an extra Rwf146 billion, worth 7.4 per cent in real terms over the last quarter, is a positive indicator that the country’s journey toward its EDPRS II goals is on course. The government hopes to deliver the country to a middle income economy ($1240 GDP per capita) by 2020. Amb. Claver Gatete, the minister for finance and economic planning, said a more coordinated approach from all sectors of the economy is still vital for Rwanda to attain growth objectives. “These latest growth figures show us that we are slowly moving toward our set goals. We will continue to build our macro-economic fundamental, improve the business environment and work with stakeholders to achieve our objectives,” Gatete said. The government and development partners project the economy to grow by 6 per cent this year and 6.7 per cent in 2015. However, government could revise its forecast by October if the current economic performance is maintained, Amb. Gatete added. Yusuf Murangwa, the National Institute of Statistics Rwanda director-general, said the overall picture from the figures indicates that more Rwandans are getting out of poverty. “We are optimistic going by the statistics and the improvement in household income levels. This gives us a reason to believe that more and more Rwandans are getting out of poverty,” Murangwa said. According to the EDPRS II blueprint, Rwanda’s economy should be able to create more than 200,000 off-farm jobs, reduce poverty level to below 30 per cent and grow exports by 28 per cent per year.