LAUNCH OF THE AFRICAN ECONOMIC OUTLOOK REPORT 2008/09 Overview of Rwanda’s Macroeconomic Outlook by Rugwabiza M. Leonard, Macroeconomist, AfDB Thanks. After Alex setting the continental context, I’ll give an overview, as short as possible, of the macroeconomic outlook for Rwanda. I should on the onset mention that some of the projections that I am presenting are continually updated and the figures you will see were produced in late 2008, while the effects of the global financial crisis and the economic cnsequences were not felt in Rwanda as much as they now are. I’ll on colleagues discussants for most recents updates and developments.

Recent Economic Developments Macroeconomic policies GDP growth, composition Macroeconomic policies Fiscal Monetary External The presentation will mainly be summarised under two headings: First, recent economic developments consisting of an overview of developments in the real sector And The second heading refers to macroeconomic policies in the fiscal, monetary and external sectors

Recent Economic Developments Real GDP Growth and Per Capita GDP (USD/PPP at current prices) Real GDP Growth in 2008 was estimated slightly higher than 11%, while previous projections indicated a 8.5% growth. This is significantly higher than the average 7.5% of the 2005-07 period. Real GDP growth is projected to fall in 2009. In the end of 2008, projections were kept optimistic at 6.6%, though noting considerable downside risks as the real effects of the global financial crisis unfold. The higher than expected growth of last year was due to impressive growth of around 15% in agriculture, that rebounded after negative growth in 2007, as a result of good climatic conditions and government’s action in 2008 (including crop intensification and increased use of fertilisers). Last year also saw good performance of industry and services sectors (with respective growth rates of about 11% and 8%). Reflecting high commodity prices (especially food and oil prices) and domestic pressures, the inflation rate in 2008 rose to an average of 15.4% from single digit in 2007.

Recent Economic Developments (ct’d) GDP by Sector The agriculture sector growth was led by production of food crops of more than 16%. The exceptional growth of cereal production (higher than 6% for maize and 180% for wheat) is a direct result of the Crop intensification program (and good weather conditions). Other food crops also registered high growth and similar growth was registered in coffee production, which rebounded by more than 70%, following a poor perforamnce in 2007. Furthermore, livestock, forestry and fisheries recovered from the depressed conditions of 2007. Industrial production exhibited strong growth of 11% with the largest sector being construction. The construction sub-sector experienced growth of about 26% in 2008. (large public sector investment projects and private sector investments in hotels and housing are responsible for the increased activity in the sector). Construction growth resulted in a 97% increase in cement imports (only 2% of local cement production growth) showing significant local capacity constraints. Manufacturing accounted for about 7% of GDP in 2007. food processing and beverages and tobacco contitute more than 60% of manufacturing activities. The decrease in food processing (-20%) and furniture (-4%) associated to small increase of beverages and tobacco (3%) and textiles (3%) resulted in a negative growth of the manufacturing sub-sector (-4%). In 2008, growth in the service sector as a whole is estimated at a little less than 8%, with increased whole sale and retail (9.4%) and hotels and restaurant (29%). The transport and communication sector is estimated to have registered growth of 14.2% (telecommunications at about 20%). Public administration registered negative growth (-7%) while growth rates of other services (finance as result of GoR’s financial liberalisation program start yielding results grew by 12%; real estates and business services around 11%) were above 11%.

Macroeconomic Policies Public Finances

Macroeconomic Policies (ct’d) Current Account (percentage of GDP at current prices)