The African Development Bank (AfDB) has released a report that forecasts that Rwanda will experience the highest gross domestic product (GDP) growth in East Africa in 2024, The New Times, Rwanda’s largest daily newspaper, reported on Sunday, August 6, 2023.
The AfDB report, titled “Mobilising Private Sector Financing for Climate Change and Green Growth,” predicts that Rwanda’s GDP will grow by up to 8% in 2024, leading the region, followed by Uganda with up to 7% growth, and Kenya with up to 6% growth.
Rwanda’s growth momentum is expected to be sustained by improved institutional performance, supported by policies aimed at enhancing investments and building resilience across various sectors.
Despite facing challenges in recent years, Rwanda has remained one of the top performers in Africa. The country experienced a decline in real GDP growth from 10.9% in 2021 to 8.2% in 2022. The drop in GDP growth during this period was attributed to rising international commodity prices and poor harvest.
The impact of these factors led to increases in energy, transport, and food prices, resulting in a significant rise in inflation from 0.8% in 2021 to 17.7% in 2022. In response, the government implemented measures such as subsidies on fuel, fertilizer, seeds, and public transport, as well as increased spending on social protection and school feeding programs.
The AfDB report also highlights that overall, East African economies are projected to grow at a higher rate compared to their continental peers. The region’s economic growth is estimated to accelerate to 5.1% in 2023 and 5.8% in 2024, driven largely by growth in Uganda, Ethiopia, Kenya, Djibouti, and Tanzania in that order.
However, the report cautions that political uncertainties and global shocks could potentially threaten this positive economic momentum. It specifically points out that the ongoing conflict between Sudan’s military and the country’s main paramilitary force poses a threat to regional stability and may lower the projected growth rates.
In addition to these challenges, the report identifies several external and domestic downside risks that could impact the positive economic outlook. External risks include a global economic slowdown, rising commodity prices, geopolitical tensions like Russia’s invasion of Ukraine, international trade policies, exchange rate depreciation, and potential resurgences of COVID-19.
Rwanda’s economic prospects look promising, with the African Development Bank forecasting an impressive 8% GDP growth in 2024, leading East Africa. This growth is attributed to improved institutional performance and proactive policies, reinforcing Rwanda’s commitment to sustainable development.