Economy of Rwanda

Economy of Rwanda

Rwanda’s economy experienced rapid GDP growth and economic stability in the 1960s and1970s, with real GDP growth of 6.5 percent per annum during the period 1973-80. However GDP growth declined to an average of 2.9 percent in 1980-85, and further to –0.3 percent in 1986-90. In the wake of this economic stagnation, GNP per capita which had risen from US$70 in 1973 to a peak of US$390 in 1989, fell to US$250 in 1993. The prolonged decline in domestic economic production and incomes resulted in increased poverty, stagnant government revenues, a steep decline in exports, increased dependency on external assistance and a high external debt burden.

As a result of the war and genocide of 1994, real GDP fell by 50 percent and the inflation rate rose sharply to 62 percent compared to 12.4 percent in1993.

With the restoration of peace in most parts of the country, GDP rebounded by nearly 35% in 1995, 15.8 % in 1996, almost 13 % in 1997, and 9.6 % in 1998. The inflation rate had declined to 16 % by 1997 and approximately 3 %t in 1998 as a result of new policy measures that were put in place to ensure stricter fiscal and financial control as well as better control the large inflows of external assistance.

The economy of Rwanda is categorized into three main sectors, namely; agriculture, industry, and service. With a GDP composition of 33.3% for Agriculture, 52.9% service and 13.9% industry of the economy.

With GDP-Purchasing power parity of $ 14.91billion, GDP real growth rate of 7.7% and GDP per capital of $1400 as of 2012.

The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment and pursuing market-oriented reforms.

The Rwandan government is seeking to become regional leader in information and communication technologies with establishment of Special Economic Zone (SEZ) which seek to attract investment in all sectors, but specifically in agribusiness, information and communications technologies, trade and logistics, mining, and construction.

Inflation rate has been at 8.5% as of 2012, while exports account for USD 358.1million, imports account for USD 1.414billion as of 2012

Rwanda has achieved some of the millennium development goals especially on child mortality rate reduction, improved on maternal health and combating AIDS