Economy to slow down to 7 percent in 2011

Rwanda’s economic growth is expected to slow down to 7 percent this year, slightly below 7.4 percent registered last year on account of bad weather conditions affecting agriculture, the key driver for economic growth. According to John Rwangombwa, the Minister of Finance and Economic Planning, the country expects a slow growth in agriculture because yield season A, which runs from September to March (Season A) has been held back by lack of rain. “The rains for season A are not doing good ; we expect season A for 2011 not to perform well but we have put in place measures to invest heavily in season B which we have not been doing ,” Rwangombwa told a press briefing last week. While the sector expanded by 7.2 percent in 2010, it is projected to slow down to 6 percent this year. “We have agreed with the Ministry of Agriculture to invest heavily in marshland use so we expect to see bigger performance in Season B than it has been,” he said. Government has indentified 35,000 hectares of marshlands for rice production to increase the crop’s yield and counter the heavy import bill. The Minister observed that despite the anticipated slow down; government will continue to invest heavily in agriculture. Specifically, the sector continues to benefit from the large investments in fertilizers, improved seeds and extension services under the crops intensification programme that was launched in 2007. Economic growth is also expected to be affected by inflation, which is projected to rise to an average of 4.4 percent from an average of 2.3 percent last year. “Because of the current trend in the international market, the rise in oil prices, we expect to see inflation higher than last year,” he said. “This is the year (2010) that we had the lowest inflation for the past 10 years where we ended the year with 0.23 percent inflation and an annual average of 2.3 percent.” While credit to the private sector increased by 11 percent last year, well below the 20 percent target for the whole year, this year credit is projected to grow by 23 percent. “When you look at the performance in the course of the year, you see growth picking in the last part of 2010 which shows that we expect better performance in 2011.” Ends