Rwanda’s economy is set to register strong growth between 2024 and 2026, buoyed by a recovery in agriculture and strong performances in services and industry, according to the World Bank’s latest Rwanda Economic Update.
After expanding by 8.2 percent in 2022-2023, the country’s real GDP expanded by 9.7 and 9.8 percent in the first and second quarter of 2024, driven by solid private consumption and a revival in investment.
Looking ahead, the World Bank projects an average growth rate of 7.6 percent over the next three years. The rebound in agriculture after years of weather-related setbacks will play a crucial role, alongside continued momentum in sectors such as tourism, telecommunications, and financial services. Agriculture output, which grew by 7.8 percent in early 2024, reversed a 3.2 percent decline from the same period last year, thanks to improved weather conditions and increased land utilization.
Rwanda’s tourism sector saw a significant boost in 2023, with foreign arrivals increasing by 34.7 percent to reach 1.5 million visitors. Tourism-related earnings grew 40.8 percent, contributing 16.1 percent of total export revenues in 2024. This sector’s recovery has rippled through the economy, lifting industries like hospitality, transportation, and retail according to the Economic update.
The industrial sector has also played a key role in Rwanda’s growth, supported by the government’s Manufacture and Build to Recover Program. Manufacturing, particularly in food processing, textiles, and metal products, has seen strong growth, while large infrastructure projects, including the construction of Rwanda’s new international airport, have bolstered the sector. However, this industrial growth has widened the current account deficit, as imports rise to meet reconstruction and infrastructure needs.
Despite these challenges, Rwanda’s debt levels remain manageable. The December 2023 Debt Sustainability Analysis (DSA) reaffirmed the country’s moderate debt risk rating, even as public debt is forecasted to peak at 78 percent of GDP in 2024. Rwanda’s ability to sustain this debt is due to high growth rates and favorable borrowing conditions, with over 85 percent of external debt being concessional, the report indicates.
Inflation, which has been a concern in recent years, is expected to gradually decline, returning to the National Bank of Rwanda’s target of 5 percent ± 3 percent. The government’s focus on fiscal discipline, including reducing energy subsidies and improving oversight of state-owned enterprises, will help maintain fiscal stability while continuing to support economic growth.
With strong investment, agricultural recovery, and a vibrant services sector, Rwanda is positioned for sustained economic expansion, further solidifying its role as a key player in regional growth.
