major macro economic indicators
|GDP growth (%)
|Inflation (yearly average, %)
|Budget balance (% GDP)
|Current account balance (% GDP)
|Public debt (% GDP)
(e): Estimate (f): Forecast * Fiscal year from 1st July - 30th June. 2022 data: FY21-22. **Urban inflation, main gauge of inflation
- Geological potential: cassiterite, coltan, gold, precious stones (aquamarine, ruby, sapphire)
- Tourism potential with high added value
- Developing industrial and financial base
- One of the most favourable business environments on the African continent
- Significant progress in governance and relative political stability
- Agriculture exposed to climate risks
- High dependence on imported commodity prices and international aid
- Large twin deficits and high public debt
- The country is landlocked and exposed to geopolitical tensions in the Great Lakes region. Tensions with the DRC have intensified, but a direct military confrontation between the two countries remains unlikely.
- High demographic pressure, population density among the highest in Africa
Growth still high, despite the fallout from the war in Ukraine
After rebounding strongly and rapidly from the Covid-19 recession, the economy remains robust despite the effects of the war in Ukraine. In 2023, growth will continue to be supported by continued strong private consumption and a dynamic service sector, driven by increasing digitalisation and the recovery of tourism. In addition, the government will continue to invest in the framework of the National Transformation Strategy, financing projects aimed at improving access to electricity and drinking water, the national road network and supporting urbanisation, among others. However, weakening external demand due to the softer global economic outlook will continue to weigh on goods exports. In addition, the tightening of monetary policies in advanced economies, as well as the possibility of further monetary policy tightening by the Central Bank of Rwanda, which raised its policy rate to 6.5% in November 2022 to contain persistently high inflation, could weigh on private investment. Moreover, inflation will remain above the central bank's target of 3-5%, and will continue to be driven largely by food prices. However, it will be lower than in 2022 due to government measures such as fuel and fertiliser subsidies.
Persistently large twin deficits
The current account deficit will remain large due to high prices for imported food and energy, capital goods required for investment, and weakened external demand affecting exports. However, it will benefit from the robust tourist and transport sectors, expatriate remittances and international organisations. FDI, as well as multilateral and bilateral aid and loans, will continue to finance this deficit. Foreign exchange reserves will remain at an adequate level, above four months of imports.
The public deficit will decline slightly as a result of the government's rationalisation of expenditure, notably on non-wage recurrent expenditure, underperforming public investment, and Covid-19-related expenditure. However, fiscal consolidation will remain limited, with increased spending pressures from the impact of the war in Ukraine partly offsetting fiscal efforts. The deficit will be financed by borrowing from foreign official partners, using the proceeds of the IMF SDR allocation, and domestic issuance. Although public debt, which is about 75% external, will continue to increase, it will remain sustainable because of the almost entirely concessional nature of its external share.
Relative political stability and overall better relations with neighbours
President Paul Kagame won a third consecutive term in office in 2017, officially obtaining almost 99% of the vote. In 2018, the dominance of Mr. Kagame's Rwandan Patriotic Front (RPF) was again confirmed in the legislative elections: in a broad coalition of six parties, the RPF won 74% of the vote and 40 of the 53 seats submitted to the voters. Regularly accused of stifling dissent and controlling the political landscape, Paul Kagame and the RPF are also credited with bringing peace and political stability. Their domination of the political scene is not expected to be challenged at the 2023 (legislative) and 2024 (presidential) elections. Regionally, efforts to normalise the difficult relationship with Burundi have been made: in July 2021, the country repatriated 19 Burundian fighters and held a series of meetings with political and military officials from its northern neighbour. In addition, on 31 January 2022, Rwanda reopened its land border with Uganda (which had been closed in February 2019), an encouraging sign towards the normalisation of relations between the two neighbouring countries. The country has also distinguished itself by repeatedly sending troops to Mozambique to fight the Islamist insurgency. However, this has reignited tensions with Pretoria due to South Africa's military aspirations in the region under the auspices of the Southern African Development Community (SADC). Moreover, while relations with the DRC have partly normalised, resulting in the signing of three bilateral cooperation agreements in June 2021, tensions have resurfaced since March 2022 over the DRC's accusation of military support to the M23 rebel group in the DRC.
Last updated: April 2023