Finance Minister John Rwangombwa has disclosed that Rwanda’s economic growth will drop to 7.7% this year from 8.6% of 2011 as a slowdown in Europe curbs tourism and falling commodity prices reduce revenue.
Rwangombwa said in an interview Tuesday in Addis Ababa, Ethiopia, where he is attending the World Economic Forum on Africa.
Tourism is the largest source of foreign currency for Rwanda accounting for about $200 million annually.
“It is mainly about world economic shocks and how tourism will be affected,” Rwangombwa said. “Commodity prices are affecting our exports.”
Rwanda aiming at drawing more foreign direct investment while seeking to reduce dependence on commodity exports.
The export of coffee and tea has expanded an average of 8.4% annually in the five-year period that ended in 2011, according to the United Nations.
Rwanda Central Bank has room to leave interest rates on hold as the inflation rate should stay below 10% this year, Rwangombwa said.
Inflation accelerated to 8.2% in March from 7.9% in February.
The Bank of Rwanda raised its key lending rate by 50 basis points, or 0.5 percentage point, to 7.5% on May 4. It was the first increase in six months.
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