The World Bank projects Rwanda’s economy will grow by 7.2 percent in 2022 and 7.9 percent in 2023, the international lender said in the 18th edition of the Rwanda Economic Update report launched yesterday.
“Growth will be supported by a more widespread rollout of vaccination and an easing of mobility restrictions which will facilitate further increases in economic activity. Firming global activity will continue to raise the volume and prices of Rwanda’s traditional exports,” The bank says in a report.
In the 17th edition of Rwanda’s Economic Update, the international bank had projected Rwanda’s economy to growth 5.1 percent in 2021, now revised upwards to 10 percent, 7.0 percent to 7.2 percent in 2022 and 7.2 percent downwards from 8.1 percent in 2023.
The world bank also projects Rwanda’s inflation at 0.7 percent in 2021, 5.7 percent this year and 6.8 percent in 2023. The report indicated that headline inflation is projected to pick up, however, it will remain within its 5±3 target band, driven by the increases in global demand, international food and oil prices and domestic activity.
Unemployment Levels to Remain High in Rwanda
However, the World Bank warned that unemployment levels will remain high despite the strong recovery in the economy. This was attributed to the deterioration of employment conditions especially for women with the female unemployment rate now 13.6 percentage points higher and male unemployment rate 7.7 percentages point higher than in the first quarter 2020.
“While GDP is close to the pre-pandemic level, the employment to population ratio aged 16 and above is 8 percentage points below and the unemployment rate more than 13 percentage points above levels at the beginning of 2020. One reason for lagging employment recovery is that more rapid growth in part reflects the shift of workers to higher-productivity jobs rather than across-the-board increases in firm output,” World bank in the report.
The current account deficit fell to 11.4 percent of GDP in the first nine months of 2021, 1.5 percentage points lower than in the same period of 2020.
The current account deficit is expected to remain high due to strong import growth, despite a positive outlook for the price of Rwanda’s major export crops, but the availability of sufficient financing should maintain an adequate level of reserves.
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