Rwanda’s merchandise deficit lessens 2.6 percent in Q1

Rwanda Cloth Factory
Rwanda Cloth Factory

Rwanda’s merchandise deficit lessened by 2.6 percent in the first quarter of 2022, the country’s central bank said on Thursday.

“Merchandise exports continued to recover from COVID-19-induced drop, rising by 44.6 percent compared to the same period last year,” said John Rwangombwa, governor of the National Bank of Rwanda, when briefing media in the capital city Kigali.

The increase in export revenues is mainly attributed to a combination of rising commodity prices for the country’s traditional exports, including coffee, tea and minerals as well as increasing volume of non-traditional exports, he added.

Rwangombwa attributed the increasing volume of exports to the recovering manufacturing sector amid ongoing government policies.

Merchandise imports rose by 14.2 percent, driven by rising international commodity prices amid high domestic demand, according to the central bank.

In a statement, the central bank said Rwanda’s economy continues to recover from the recession caused by the pandemic, with all indicators pointing to continued strong recovery momentum in the first quarter of 2022.

The massive COVID-19 vaccination campaign that led to large-scale easing of restrictions together with accommodative central bank monetary policy supported the improvement of economic activities in the first quarter of 2022, it said.

These economic policies will continue to support economic growth in the second quarter of 2022, according to Rwangombwa.

The central bank, however, said the recent hike in inflation, linked in part to the negative impact of the Russia-Ukraine conflict, is likely to constrain private consumption. The inflation rate in April increased to 9.9 percent, well above the central bank’s upper band for 2022.

According to the central bank, the shortage and higher costs of some imported inputs as well as unfavorable weather conditions that affected agriculture in the first season are expected to have a negative effect on this year’s economic growth, which will remain strong but lower than 7.2 percent initially projected.

The central bank is working with stakeholders to limit the impact of external pressures on Rwanda’s purchasing power, said Rwangombwa. Enditem

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