Rwanda’s economy is poised to surpass its previous 2024 growth projection of 8.3 percent, buoyed by strong industrial and services activity, according to the central bank. The economy expanded 9.2 percent in the first three quarters, and early indicators suggest that momentum remained robust in the final months of the year.
“This performance is broad-based, with industry and services registering double-digit growth, while agriculture rebounded from the previous year’s poor harvest,” National Bank of Rwanda Governor, John Rwangombwa said in Kigali today while announcing the monetary policy decision.
The central bank opted to maintain its benchmark rate at 6.5 percent, citing a stable inflation outlook and resilient domestic economic activity. “Inflation is projected to remain within the target range, averaging 6.5 percent in 2025 before declining to 4.1 percent in 2026,” Rwangombwa said. Headline inflation stood at 4.8 percent in 2024, a sharp drop from 14 percent the previous year, largely due to improved agricultural production and the lagged effects of tighter monetary policy.
Despite supply-side pressures, particularly in food prices, inflation remained within the bank’s target range of 2 percent to 8 percent. Fresh food inflation rose to 5.6 percent in the fourth quarter, up from 0.2 percent, driven by a base effect from a sharp decline in vegetable prices a year earlier. Core inflation inched up to 5.4 percent, reflecting higher housing and beverage costs. Energy inflation, however, declined due to lower liquid and solid fuel prices.
The Rwandan franc depreciated 9.42 percent against the dollar by December 2024, a slowdown from the 18.05 percent drop in 2023. “This signals that exchange rate pressures are easing, and we expect a slighter depreciation this year,” the National Bank’s Chief Economist Thierry Kalisa said “In the medium term, we anticipate the currency to return to its typical 5 percent annual depreciation.”
Gross official reserves stood at 5.4 months of import cover, well above the four-month benchmark. The trade deficit narrowed 3.7 percent in the fourth quarter, supported by a 15.8 percent jump in merchandise exports, fueled by steady commodity prices and rising regional demand for manufactured goods.
While inflation risks persist, mainly from geopolitical tensions and unpredictable weather patterns affecting food supply, the central bank sees its current stance as appropriate. “Our decision ensures inflation remains within the target range while supporting economic growth,” Rwangombwa said.
With economic activity showing strong momentum, the outlook for 2025 remains positive, although external risks, including global commodity price volatility and financial market shifts, could pose challenges.
