Rwanda keeps rates on hold, Ghana, Botswana growth outlook

by Reuters 0

Rwanda keeps rates on hold, expects stronger growth

(Reuters) – Rwanda’s central bank kept its key lending rate unchanged on Wednesday saying that, despite rising inflation, monetary policy could remain accommodative as the improving economy had yet to reach its full growth potential.

The economy would grow 7 percent this year rather than the 6.5 percent the bank predicted earlier, its governor John Rwangombwa told a news conference after it held its repo rate at 6.50 percent.

Rwangombwa also said he saw inflation in the 4.5 percent to 5.5 percent range by year-end, up from a projection of 3.5 to 5 percent, with the weakening of the country’s franc against the dollar one factor in the rise.

“(Economic) output is evolving below potential, which implies that (the central bank) can continue to stimulate economic activity without creating inflationary pressures,” he said in a statement.

Rwanda’s urban inflation rate, a key indicator for the central bank, rose 4.8 percent year-on-year in November, up from 2.9 percent a month earlier.

Ghana sees sharp drop in growth

Ghana’s unadjusted gross domestic product (GDP) growth stood at 3.6 percent year-on-year including oil in the third quarter of 2015, the statistics office said on Wednesday.

The figure compares to a revised 12.2 percent for the third quarter of last year and the sharp difference is mainly due to base effect, or technical factors, rather than to a drop in GDP itself, said deputy government statistician Baah Wadieh.

Ghana’s GDP growth has slowed sharply in the last two years due to lower commodity prices and an economic crisis that has forced the country to sign a three-year aid deal with the International Monetary Fund. It is also grappling with a three-year electricity crisis that has hurt industry.

“There has been a negative growth in mining and quarrying due to the fall in world gold prices leading to some mines closing their operations,” Wadieh told a news conference, adding that the hotel and restaurants sector also registered declines.

The statistical service has projected that the economy will grow at 4.1 percent in 2015, slightly above the government’s initial target of 3.9 percent.

Ghana’s producer price inflation rose slightly to 3.0 percent in November from a revised 2.9 percent in October, Wadieh said.

Botswana’s economic growth slows

Botswana’s economic growth slowed to 2.3 percent in 2015, compared with 4.4 percent last year, due to weak global demand for diamonds and falling customs revenues, the International Monetary Fund (IMF) said.

“After recovering strongly from the 2009 downturn, Botswana’s pace of economic activity is slowing in 2015 owing to weaknesses in the global demand for diamonds,” IMF executive Enrique Gelbard said late on Tuesday following a two-week visit to Botswana.

Botswana’s President Ian Khama announced a bold economic stimulus package in November after a sharp drop in demand for its diamonds dented growth.