He was presenting the Monetary Policy and Financial Stability Statement (MPFSS) on September 25. The latter features the economic performance for the first half of the year and provides projections for the remainder of 2024.
With this robust growth, Governor Rwangombwa emphasized that the Rwandan economy is expected to surpass the originally projected growth for the year.
'We expect our economy to perform much higher than the initial 6.6 percent projection for 2024,' he stated.
According to Rwangombwa, all sectors of the economy have contributed to this growth, with the service and industrial sectors showing particularly strong double-digit increases.
Over the past five years, the service sector has grown by an average of 48.2%, the industrial sector by 24.1%, and the agriculture sector by 18.4%.
However, Rwangombwa pointed out a significant challenge: the growth is not reflected in the export sector, which has impacted Rwanda's foreign exchange earnings.
'The only challenge we have is that this growth is not reflected in our export sectors. This impacting our foreign exchange earnings and foreign exchange market.
"This is where the government and the private sector need to do more because the economy is growing but the imbalance between imports and exports continue to widen,' he stated.
This issue is evident in the rising level of imports, which grew by 5.7% in the first half of 2024, while exports decreased by 0.9%.
In 2023, imports rose by 17.4%, and exports increased by 11.2%, highlighting the ongoing trade deficit. The widening of the trade deficitâ€"up by 9.6% in the first half of this yearâ€"can be attributed to a drop in the prices of exported commodities, while imports continue to rise.
This trade imbalance has also contributed to the depreciation of the Rwandan franc against the US dollar. In the first half of 2024, the franc depreciated by 3.7%, which is a notable decrease compared to the 8.8% depreciation recorded during the same period last year.
Governor Rwangombwa noted that while this year's depreciation is expected to be just above 8%, it remains higher than the historical average, driven by pressures from the trade deficit.
On a positive note, inflows from travel, tourism, and remittances continue to rise, helping to finance the trade deficit. Rwanda currently has enough reserves to cover 4.7 months of imports, with projections to end the year at 4.8 months.
Inflation stood at 4.7% in the first half of 2024 and is projected to average around 5% for the entire year.
Théophile Niyitegeka
