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Rwanda’s economy on recovery trend amid COVID-19 pandemic: central bank

KIGALI, (The Southern African Times) – Rwanda’s central bank said that the country’s economy continues to gradually recover from the 2020 recession caused by the COVID-19 pandemic due to sizeable fiscal and monetary policy measures.

Compared to the same period last year, the recovery in the first quarter of 2021 was mainly driven by a faster recovery in agriculture which grew by 6.8 percent from a decline of 0.5 percent and the industrial sector with a growth of 9.7 percent from 1.9 percent, the National Bank of Rwanda (BNR) said in a statement.

“The economic recovery is expected to continue at a higher pace as evidenced by the Composite Index of Economic Activities, a high frequency economic indicator which rose by 32.4 percent in the second quarter of 2021 from 12.7 percent in the first quarter of 2021,” the statement said.

According to the statement, in the second quarter of 2021, headline inflation decelerated to 0.7 percent from 2.1 percent recorded in the first quarter of 2021.

The current low inflation environment is driven by good agricultural production in seasons A and B 2021 that moderated food prices.

The bank said consistent with current economic conditions, assumptions on expected global and domestic economic recovery and prospects in international commodity prices, headline inflation is projected at 0.7 percent in 2021 and 5.6 percent in 2022.

The bank has maintained the benchmark lending rate at 4.5 percent to continue supporting the economic recovery process.

According to the central bank, the financial sector continued to be stable and resilient despite the economic effects of the COVID-19 pandemic.

The Rwandan economy is expected to grow at 5.1 percent in 2021, according to BNR.

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