However, this forecast by the bank is slightly lower than the government and the International Monetary Fund’s projection of 6 per cent. The bank predicted this growth as a result of the country’s expansion of the services sector which has contributed significantly to a recovery of the growth rate to 7.4 per cent in the first quarter of 2014.
The country’s first-quarter reading reflected a stronger than expected rebound in economic growth by a 2.7 per cent increase compared to 2013. This growth and the World Bank’s forecast indicate that the country may recover faster than expected from the slowdown of the 2013 economic growth.
The East African’s nation growth slowed to 4.7 per cent last year due to aid shortfall experienced in the second half of 2012 as well as delays in budget expenditures.
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“The lagged effect of the aid shortfall to the economy was extended to the second half of 2013, decelerating both public and private sector activities. However, signs of recovery are evident in 2014. In addition to GDP growth rates, turnovers of services and industries have been picking up. Therefore, we are hopeful that the growth in 2014 will be higher than that in 2013,” said Toru Nishiuchi, World Bank Economist and co-author of the Rwanda Economic Outlook report.
According to the World Bank future growth for the East African country is expected to hinge on domestic resource mobilisation and transformation in driving private sector–led growth.
Carolyn Turk, World Bank Country Manager for Rwanda said, “Rwanda's growth rate in the last decade has been impressive. What is needed now is a significant structural transformation of the economy, from one that is characterised by a large public sector, by a dominance of the non-tradable sectors and by limited private investment. This kind of transformation would minimise current vulnerabilities in the economy and enable Rwanda to sustain its high growth rates into the next decade.”
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Growth in the landlocked country for next year is expected to be 6.6 per cent, the World Bank said, while the Rwandan government expects growth at 6.7 per cent.
Rwanda's impressive GDP growth has often been approximately 8 per cent.