KIGALI, March 21 (Xinhua) -- Rwanda's central bank expressed optimism on Thursday that the country's strong economic growth momentum, observed in the previous year, will persist into 2024 despite external and internal negative shocks.
"Rwanda's economy maintained its growth momentum in 2023, despite facing external and internal negative shocks. The real GDP grew higher than initially projected," said John Rwangombwa, governor of the National Bank of Rwanda (NBR), while presenting the country's Monetary Policy and Financial Stability Statement in the Rwandan capital, Kigali.
"This strong growth momentum is expected to continue in 2024, led by increasing investments in the construction and tourism sub-sectors and the recovery of the agriculture sector thanks to improving weather conditions," he added.
Rwanda's economy grew at 8.2 percent in 2023, higher than the initially projected growth of 6.2 percent. This growth was mainly driven by the services sector, industry sector and agriculture sector, which grew by 11.2 percent, 10.2 percent and 1.7 percent, respectively.
Reflecting on monetary policy measures, Rwangombwa highlighted the central bank's proactive stance in managing economic stability. Throughout 2022 and 2023, the central bank implemented rate hikes to address evolving economic conditions.
Notably, the bank increased by a cumulative total of 300 basis points over the two-year tightening cycle, reaching 7.5 percent by the end of 2023.
The financial sector continued to grow in number and size. Growth in size was mainly driven by increased deposits and retained earnings, and this growth is reflected across all sectors, he said.
The increase in the number of financial institutions, on the other hand, was driven by the entrance of new Non-Deposit Taking Financial Institutions, following the review of the law governing non-deposit-taking financial service providers in April 2023.
Rwangombwa said that the financial sector remained sound and stable, backed by adequate capital and liquidity buffers and healthy quality assets.
He noted that headline inflation is on a declining trend evolving within the band. This is due to alleviated pressures on core inflation from international food prices (processed food items), easing trend recorded from global energy prices, and improved fresh food supply resulting from crop production.
Recognizing the escalating risks posed by climate change, he emphasized the importance of proactive measures to manage climate-related and environmental financial risks.
The central bank has developed comprehensive guidelines to address these challenges, ensuring the sustainability and resilience of the financial system.
Rwangombwa reiterated Rwanda's commitment to fostering economic resilience, sustainable growth and financial stability. The nation stands poised to navigate future challenges, leveraging its strengths and strategic initiatives to propel continued progress and prosperity. ■
