According to the 18th issue of the Rwandan Economic Update, the country had a robust economic recovery in 2021. The gross domestic product climbed upwards by 11.1% in the first nine months of the year, indicating a broad-based recovery from the COVID19 blighted 2020. In that same period, industrial production increased by 16.5%, agricultural production by 6.8% while traditional exports such as coffee, tea and others surged by 35%. Despite this recovery, the report notes that unemployment has continued to rise. The GDP may have tenured to pre-pandemic levels, unemployment became 13.8% higher than it was at the start of 2020, with female employment declining faster than men’s. Rwanda’s economy was expected to grow by 7% but the Russian war on Ukraine is expected to exacerbate the inflation, rising prices of foodstuff and household items. The midweek edition of Business Edge takes a look at Rwanda as its growth forecast declines and what it means for the country’s continued recovery. Tolulope Adeleru-Balogun is joined by Dr XN Iraki of the University of Nairobi.
Rwanda’s growth has long been a source of joy to many African counterparts as its economic development in the last decade was rapid. Just before the pandemic, its growth had exceeded 10% in 2019- one of the few times economic growth entered double digits on the African continent. “The biggest factor [of Rwanda’s growth] has been peace and harmony. Number 2 is the export growth market. A lot of tourists also visit Rwanda,” Dr Iraki says, identifying how Rwanda’s economy has been booming.
That said, Rwanda’s numbers could be startling to a casual observer: inflation in 2018 was 1.36%, 2.43% in 2019 and blew to 7.72% in 2020. It dropped to 2.4% in 2021 and right now it stands at 4.7% Its debt to GDP ratio is at 74.8% for 2022. This is not peculiar to Rwanda and not dire, Dr Iraki says. “Anytime an economy grows, it’s accompanied by inflation. By comparison with other countries in Africa and globally, it is manageable..”
Watch the full episode above.