Rwanda Economic Forecast

In the final quarter of 2022, GDP growth decelerated to 7.2% year on year (Q3: +10.0% yoy), the softest since Q1 2021. Consequently, the economy grew 8.2% in 2022, a softer expansion than 2021’s 10.9% post-pandemic rebound. Looking at the details of Q4, the deceleration was driven by softer private consumption and exports expansions. Private consumption was rather resilient, despite price pressures intensifying to 32.2% on average in Q4. Meanwhile, fixed investment declined at a slower pace in Q4 from the previous quarter. Less positively, government spending contracted marginally in the final three months of 2022. In terms of production, the rebound in the industrial sector and stronger agricultural activity were unable to offset the slowdown in the services sector. In 2023, devastating floods in May will have impacted activity.

In April, inflation cooled to a seven-month low of 28.4% (March: 31.0%), but still markedly above the 2.0–8.0% target band. The moderation was driven by softer price increases for food and transport. Despite high inflation, the National Bank of Rwanda maintained the key interest rate at 7.00% at its 11 May meeting. Inflation will average markedly higher than in 2022.