Macroeconomic Forecast Rwanda
May 2007 | Macroeconomic ForecastsIf you would like to subscribe to East and Central Africa Monitor and gain instant access to this article, please click here to subscribe.
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BMI View: We expect growth to slow in 2007 as bottlenecks in the manufacturing sector begin to impact on productivity. This will begin to recover in 2008, partly due to the implementation of donor-led programmes in 2007, which should provide a boost to economic activity. Although inflation has resumed an upwards trend, expect ongoing price pressures and the feed-through effects of increased donor aid to prompt the government to tighten monetary policy, with our year-end real interest rate forecast standing at 2.67%. As such, we expect some limited appreciation of the RWF, forecasting a slight strengthening to RWF537.9/US$ by end-2007. However, we did not expect a major move stronger, since this would impact on the country's export attractiveness, in an environment where the trade deficit is narrowing only slowly, to US$0.28 billion in 2007.