Kenya, Uganda, Rwanda revise economic growth projections for 2013 upwards

Tuesday October 08 2013

A fresh food market in Kigali, Rwanda. Inflation rates in most of EA countries have been edging upwards. It is expected to fall going forward. Kenya, Uganda and Rwanda have revised their economic growth rates buoyed by strong growth in agriculture and service sectors. Photo/File

Kenya, Uganda and Rwanda are expecting economic activity to pick up in the third quarter, projecting economic growth to be in excess of 5.5 per cent for the full year.

Rwanda is expecting its economy to grow by 6.6 per cent, the highest among the three countries, buoyed by the resumption of donor funding.

Uganda has revised its expected economic growth rate to 5.8 per cent as private sector lending picks up while Kenya is still expecting to meet its 5.5 per cent target this year.

If the three economies grow at the expected rates, companies which had earlier in the year made projections based on the estimated economic growth rates may also be able to meet their objectives.

“The macroeconomic outlook point to a pick-up in growth, in the second half of this year as domestic demand recovers with the resumption of aid flows. For the year as a whole, economic growth is projected at 6.6 per cent and at 7.5 per cent in 2014, supported by a resumption of strong growth in services,” said the National Bank of Rwanda (BNR) in a statement.

Last month, after its latest Monetary Policy Committee, BNR said that the franc had depreciated slightly by 3.9 per cent as of September 27, 2013 since December 2012 but that the situation is expected to stabilise through the end of 2013, on account of increase in foreign exchange inflows as well as regained confidence in foreign exchange market.


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Kenyan lenders such as Equity Bank, which have subsidiaries in Rwanda and Uganda saw the contribution of profits from their regional subsidiaries drop in the first half of this year after economic activity slowed as donors withheld aid to the two countries.

Rwanda’s banking regulator made the announcement last week, on the same day that Bank of Uganda (BoU) said that it was maintaining the Central Bank Rate (CBR) at 12 per cent for the second consecutive month, after raising it last month from 11 per cent for the first time in almost two years.

“Real economic growth for 2012/13 has been revised upwards by the Uganda Bureau of Statistics (UBS) to 5.8 per cent from the preliminary estimate of 5.1 per cent. As such, the negative output gap – the slack in the economy caused by below trend economic growth over the past two years – has diminished,” said Prof Emmanuel Tumusiime-Mutebile, governor BoU in a statement.

Prof Tumusiime-Mutebile said that it is expected that the inflation rate – the pace at which the prices level changes – which has been on an upward trend is expected to fall back to BoU’s target policy of 5 per cent and hence the neutral monetary policy stance that was taken during the latest MPC meeting.

Uganda’s inflation rate rose for the third consecutive month to 8 per cent in September from 7.3 per cent in August influencing BoU’s decision to maintain the CBR at the current rate.

“The upward revised performance of the economy during the FY2012/13 is mainly attributed to the better than projected performance of the activities of cash crops growing, manufacturing, posts and telecommunications, public administration and education services,” said UBS in their report released just before the latest MPC meeting by Uganda’s banking regulator.

Last Friday, Kenya’s cabinet secretary Henry Rotich, in response to a query by Business Daily shortly after signing a Sh1.7 billion ($20 million) loan agreement with the Belgian ambassador to Kenya said that East Africa’s largest economy is still expecting to grow at 5.5 per cent buoyed by the agricultural and services sectors.

The Kenya National Bureau of Statistics (KNBS) said that the economy slowed to 4.3 per cent in the quarter ending June 2013 compared to 5.2 per cent in the first quarter and 4.4 per cent reported in the second quarter of 2012.

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“We are still optimistic we will hit 5.5 per cent in GDP growth this year. We achieved 4.7 per cent in the first half of the year and we know that we will attain a higher growth in the second half than in the first,” said Mr Rotich.

Kenya’s inflation rate rose for the fourth consecutive month to 8.29 per cent in September from 6.67 per cent in August, 6.02 per cent in July, 4.91 per cent in June and 4.05 per cent in May.