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Rwanda Country Risk Report Q4 2018

Rwanda Country Risk Report Q4 2018

Strong public support and power centralisation will favour policy continuity and stability in Rwanda over the short term.

That said, rising tensions in East Africa will continue to threaten Rwanda's security going forward.

After rebounding in the last quarter of 2017, Rwanda's economic growth is set to continue to accelerate over the next two years, mainly due to an expansion in services and agriculture. Moreover, increased government-led investment in key infrastructure projects focussed on addressing the country's energy and transportation shortcomings will benefit the construction sector and ameliorate the country's business environment.

Economic recovery and substantial administrative reforms will increase revenues in the coming years, narrowing the budget deficit in the medium term.

That said, a strong uptick in capital expenditure driven by the new economic development strategy will see the deficit widening in 2018, and will keep the budget in deficit over our forecast period through to 2022.

The National Bank of Rwanda (BNR) will keep its policy rate unchanged throughout 2018 and 2019, ending a monetary policy easing cycle which begun in 2012. While inflationary pressures are subdued, gradually improving economic activity and better credit conditions will limit the need for any further easing.

Key Risks



The primary risks to Rwanda are posed by a potential deterioration of the political climate over the longer term. Kagame's prolonged stint in office, along with fuelling an already strong cult of personality associated with a personal policymaking strategy, could create a power vacuum in the case of a sudden departure.

Given historic enmity between Rwanda's Hutu and Tutsi communities, which has been in part restrained by Kagame's aggressive policies on prohibiting hate speech and criminalising genocide ideology, the president's sudden departure could spark a severe deterioration in social stability.

Regional tensions in neighboring DRC and Burundi might spill over to Rwanda, challenging the country's security environment especially if the civil unrest takes an ethnic hue.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Rwanda Growth Set To Continue Over The Next Two Years
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: TOP FIVE GOODS EXPORTS IN 2017
TABLE: TOP FIVE GOODS IMPORTS IN 2016
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Rwandan Budget To Remain In Deficit
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES FOR 2018/19 FISCAL YEAR
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
10-Year Forecast
The Rwanda Economy To 2027
A Bright Spark In Sub-Saharan Africa
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Rwanda Country Risk Q4 2018ContentsPolitical Outlook
Domestic Politics
Regional Tensions To Continue Threatening Rwanda's Security
Global Macro Outlook
Fewer Negative Surprises, But Trade Risks Rising
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: RWANDA – MACROECONOMIC DATA AND FORECASTS

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