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Rwanda Country Risk Report Q2 2016

  • February 2016
  • -
  • Business Monitor International
  • -
  • 25 pages

Core Views

Following a sharp slowdown in 2012, the Rwandan economy looksto have returned to the robust levels of growth that made it a regionaloutperformer for much of the last decade.Focus on infrastructure development by the Rwandan governmentwill continue to attract fixed investment into the country. Growth willbe maintained by private consumption over the coming year whichwill place pressure on import demand leading to a large trade deficit.Fiscal consolidation efforts through an increasing tax base will offsetfalling foreign aid following the country’s move from grant-basedfinancing to loan-based financing. Debt levels are set to rise onthe back of a low risk debt status and increasing demand for debtfinancing due to lower grant funding.

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.Surging population growth, low base effects and a governmentcommitted to market-friendly structural reforms will see Rwanda’seconomy expand rapidly over the coming years. The country’sdifficult relationship with its neighbours poses the gravest threatto this forecast; a major international crisis could derail Rwanda’sdevelopment hopes.

Table Of Contents

Rwanda Country Risk Report Q2 2016
Executive Summary 5
Core Views5
Key Risks5
Chapter 1: Economic Outlook 7
SWOT Analysis 7
BMI Economic Risk Index 7
Economic Growth Outlook 8
Infrastructure Focus Will Contribute Towards Growth8
Focus on infrastructure development by the Rwandan government will continue to attract fixed investment into the country Growth
will be maintained by private consumption over the coming year which will place pressure on import demand leading to a large trade
deficit
GDP By Expenditure Outlook 9
TABLE: GDP GROWTH FORECASTS9
TABLE: PRIVATE CONSUMPTION FORECASTS9
TABLE: GOVERNMENT CONSUMPTION FORECASTS9
Fiscal Policy And Public Debt Outlook 10
Fiscal Consolidation Will Offset Falling Donor Grants10
Fiscal consolidation efforts through an increasing tax base will offset falling foreign aid following the country's move from grant-based
financing to loan-based financing
TABLE: FIXED INVESTMENT FORECASTS10
TABLE: NET EXPORTS FORECASTS10
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES11
Structural Fiscal Position 12
Chapter 2: 10-Year Forecast 15
The Rwandan Economy To 2025 15
A Bright Spark In Sub-Saharan Africa15
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 We are
forecasting average long-term real GDP growth of 71 % over the next 10 years
TABLE: LONG-TERM MACROECONOMIC FORECASTS15
Chapter 3: Political Outlook 17
SWOT Analysis 17
BMI Political Risk Index 17
Domestic Politics 18
Kagame's Reign Will Continue Due To Public Favour18
President Kagame running for a third term will spook foreign aid donors, despite overwhelming support for the decision in a December
2015 referendum, which could lead to a faster than expected decline in grants
Chapter 4:BMI Global Macro Outlook 21
Global Macro Outlook 21
Downside Risks Gather Momentum21
TABLE: GLOBAL ASSUMPTIONS21
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %22
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % 22
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %23
TABLE: MACROECONOMIC DATA and FORECASTS25

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