Rwanda is betting on sustained growth in exports, low inflation and a buildup in the stock of foreign reserves to boost the economy through June to December, the central bank says in its outlook for the second half of the year.
The economy grew at 1.7 per cent in the first quarter of the year, down from 8.9 per cent for the same period in 2016, due to a long drought that slowed down the agricultural sector and a reduction in major construction projects.
But, the governor of the National Bank of Rwanda (BNR) John Rwangombwa projects the growth to perform slightly better in the remaining six months driven by a recovering global commodity market, which has seen tea and minerals prices pick up.
This will see export earnings increase.
Data from BNR shows the value of Rwanda’s tea exports increased by 30.7 per cent from $36.24 million in the first quarter of last year to $47.36 million in the first six months of this year boosted by a spike in tea prices.
The prices of minerals, which had taken a hit over the years are also recovering.
Rwanda’s leading export minerals include casseterite, coltan, and wolfram. Earnings from the three minerals increased by 18.5 per cent, from Rwf34.3 billion ($40.73 million) in the first half of 2016 to Rwf40.7 billion ($48.25 million).
Foreign currency reserves have also built up after the central bank reduced sales to commercial banks from Rwf132.5 billion ($157 million) in the first six months of 2016 to Rwf114.4 billion ($135.5 million) this year.
The franc has also stabilised on the back of a reduction in imports and growth in exports. The central bank projects the local currency to depreciate by three per cent against the dollar at the end of the year, compared with 4.8 per cent recorded at the end of June.
According to BNR, inflation has also eased by five per cent, a level which encourages consumption and increases liquidity in the economy.
The government projects the economy to grow at 6.2 per cent at the end of 2017 before increasing to 6.8 per cent in 2018.