We maintain an overall positive view for economic growth in Rwanda,forecasting real GDP growth to average 7.1% over the next fiveyears. The government’s plans to improve energy and infrastructurewill prompt increased levels of fixed investment, underpinning ourpositive growth outlook. This will follow a weaker growth performancein 2017, as adverse weather conditions weigh on the agriculturalsector.Rwanda’s budget deficit will remain fairly wide in 2016 as the governmentboosts spending to improve the country’s business environment.This spending plan is sustainable despite a fall in grantsas government debt remains at manageable levels and real GDPgrowth will be robust.Rwanda will face continued cross-border violence in the comingquarters, given the country’s porous borders and a high level ofinstability in the Great Lakes region. That said, regional unrest willnot pose a substantial threat to Rwanda’s stability.President Kagame running for a third term will spook foreign aiddonors, despite overwhelming support for the decision in a December2015 referendum, which could lead to a faster than expected declinein grants.
Table Of Contents
Rwanda Country Risk Report Q4 2016 Executive Summary.. 5 Core Views...5 Key Risks.5 Chapter 1: Economic Outlook.. 7 SWOT Analysis... 7 BMI Economic Risk Index.. 7 Economic Growth Outlook 8 Slowing Agricultural Exports Will Temper Short-Term Growth..8 Weaker trade dynamics will see Rwanda's real GDP growth slow modestly in 2016 and 2017. That said, robust investment in the power and infrastructure sectors will ensure growth remains above the regional average . GDP By Expenditure Outlook 9 TABLE: GDP GROWTH FORECASTS..9 TABLE: PRIVATE CONSUMPTION FORECASTS9 TABLE: GOVERNMENT CONSUMPTION FORECASTS.9 TABLE: FIXED INVESTMENT FORECASTS..10 TABLE: NET EXPORTS FORECASTS10 Outlook On External Position.. 11 TABLE: CAPITAL and FINANCIAL ACCOUNT BALANCE.11 TABLE: TOP 5 GOODS EXPORTS 11 TABLE: TOP 5 GOODS IMPORTS .11 Chapter 2: 10-Year Forecast... 13 The Rwanda Economy To 2025... 13 A Bright Spark In Sub-Saharan Africa.13 Rwanda has several structural strengths that will work in its favour over the coming decade, including sustainable drivers of real GDP growth, a strong commitment to reform and supportive business environment, rising productivity and services diversification. TABLE: LONG-TERM MACROECONOMIC FORECASTS.13 Chapter 3: Political Outlook... 15 SWOT Analysis. 15 BMI Political Risk Index... 15 Domestic Politics. 16 Warming Tanzania Ties Will Bolster Operating Environment...16 Recent steps by the Rwandan and Tanzanian governments to improve bilateral ties are likely to continue, even despite the two countries ' disagreement regarding the future of the East African Community-EU trade pact. Long-Term Political Outlook... 17 Regional Unrest Will Not Threaten Stability...17 Rwanda will face continued cross- border violence in the coming quarters, given the country's porous borders and a high level of instability in the Great Lakes region. That said, regional unrest will not pose a substantial threat to Rwanda's stability. Chapter 4: BMI Global Macro Outlook... 19 Global Macro Outlook.. 19 Brexit To Hit Global Growth.19 TABLE: GLOBAL ASSUMPTIONS..19 TABLE: DEVELOPED STATES, REAL GDP GROWTH, %20 TABLE: EMERGING MARKETS, REAL GDP GROWTH, %...21 TABLE: MACROECONOMIC DATA and FORECASTS..23