Rwanda Economic Update, June 2023
The Rwanda Economic Update No. 21 reviews the country’s macroeconomic performance and prospects and includes a special section focusing on the impact of foreign direct investment (FDI) on the domestic economy. After growing by 8.2 percent in 2022, Real GDP expanded by 9.2 percent in the first quarter of 2023. However, this growth momentum may have been halted by disastrous flooding and landslides from the recent rains. Inflation has eased but remained well above the National Bank of Rwanda (NBR) target range in the first half of 2023, despite a tightening of monetary policy since January 2022. Rwanda’s current account deficit improved in 2022, with higher export revenues and remittances outweighing rising import prices. The fiscal deficit narrowed in FY2022-23 thanks to a large decline in public spending, and strong growth which combined to reduce Rwanda’s debt as a share of GDP. Prospects for continued high growth are good, and the fiscal and debt positions are expected to improve over the next few years. The special topic emphasizes the large size of FDI inflows, encouraged by a favorable regulatory environment and improvements in governance. FDI in Rwanda appears to generate significant employment benefits, both in terms of job creation by FDI firms and related increases in hiring by domestic firms. FDI firms also appear to have strong linkages with local firms, particularly domestic suppliers, and tend to provide higher-quality jobs than domestic firms, in terms of access to social security. However, forecasts of the volume of inflows and of employment provided when registering with the Rwanda Development Board turned out to be highly optimistic, raising concerns on both limits on FDI firms and the potential for misrepresentation to gain access to incentives. FDI projects tend to be concentrated in Kigali and surrounding districts, which have much lower poverty rates than the national average, and in general there is a negative association between the level of poverty and FDI inflows. Policies to improve the impact of FDI on inclusiveness could involve encouraging FDI projects in poorer districts, promoting greater participation by women and youths, enhancing corporate social responsibility initiatives, strengthening the monitoring and ex post performance assessment of FDI, improving linkages between FDI projects and domestic suppliers, and encouraging the home country of investors to enforce mandatory standards that enhance the sustainability and inclusivity of FDI.
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Format: | Report biblioteca |
Language: | English en_US |
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Washington, DC: World Bank
2023-07-11
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Subjects: | MACROECONOMY, FOREIGN DIRECT INVESTMENT, FDI, GDP, JOB CREATION, |
Online Access: | http://documents.worldbank.org/curated/en/099070923155527476/P17745709838710d3087f70cae21a865046 https://openknowledge.worldbank.org/handle/10986/39975 |
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dig-okr-10986399752023-07-14T02:31:11Z Rwanda Economic Update, June 2023 Inclusiveness of Foreign Direct Investment in Rwanda World Bank MACROECONOMY FOREIGN DIRECT INVESTMENT FDI GDP JOB CREATION The Rwanda Economic Update No. 21 reviews the country’s macroeconomic performance and prospects and includes a special section focusing on the impact of foreign direct investment (FDI) on the domestic economy. After growing by 8.2 percent in 2022, Real GDP expanded by 9.2 percent in the first quarter of 2023. However, this growth momentum may have been halted by disastrous flooding and landslides from the recent rains. Inflation has eased but remained well above the National Bank of Rwanda (NBR) target range in the first half of 2023, despite a tightening of monetary policy since January 2022. Rwanda’s current account deficit improved in 2022, with higher export revenues and remittances outweighing rising import prices. The fiscal deficit narrowed in FY2022-23 thanks to a large decline in public spending, and strong growth which combined to reduce Rwanda’s debt as a share of GDP. Prospects for continued high growth are good, and the fiscal and debt positions are expected to improve over the next few years. The special topic emphasizes the large size of FDI inflows, encouraged by a favorable regulatory environment and improvements in governance. FDI in Rwanda appears to generate significant employment benefits, both in terms of job creation by FDI firms and related increases in hiring by domestic firms. FDI firms also appear to have strong linkages with local firms, particularly domestic suppliers, and tend to provide higher-quality jobs than domestic firms, in terms of access to social security. However, forecasts of the volume of inflows and of employment provided when registering with the Rwanda Development Board turned out to be highly optimistic, raising concerns on both limits on FDI firms and the potential for misrepresentation to gain access to incentives. FDI projects tend to be concentrated in Kigali and surrounding districts, which have much lower poverty rates than the national average, and in general there is a negative association between the level of poverty and FDI inflows. Policies to improve the impact of FDI on inclusiveness could involve encouraging FDI projects in poorer districts, promoting greater participation by women and youths, enhancing corporate social responsibility initiatives, strengthening the monitoring and ex post performance assessment of FDI, improving linkages between FDI projects and domestic suppliers, and encouraging the home country of investors to enforce mandatory standards that enhance the sustainability and inclusivity of FDI. 2023-07-11T15:38:35Z 2023-07-11T15:38:35Z 2023-07-11 Report http://documents.worldbank.org/curated/en/099070923155527476/P17745709838710d3087f70cae21a865046 https://openknowledge.worldbank.org/handle/10986/39975 English en_US Edition No.21 CC BY-NC 3.0 IGO World Bank Group https://creativecommons.org/licenses/by-nc/3.0/igo application/pdf text/plain Washington, DC: World Bank |
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MACROECONOMY FOREIGN DIRECT INVESTMENT FDI GDP JOB CREATION MACROECONOMY FOREIGN DIRECT INVESTMENT FDI GDP JOB CREATION |
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MACROECONOMY FOREIGN DIRECT INVESTMENT FDI GDP JOB CREATION MACROECONOMY FOREIGN DIRECT INVESTMENT FDI GDP JOB CREATION World Bank Rwanda Economic Update, June 2023 |
description |
The Rwanda Economic Update No. 21
reviews the country’s macroeconomic performance and
prospects and includes a special section focusing on the
impact of foreign direct investment (FDI) on the domestic
economy. After growing by 8.2 percent in 2022, Real GDP
expanded by 9.2 percent in the first quarter of 2023.
However, this growth momentum may have been halted by
disastrous flooding and landslides from the recent rains.
Inflation has eased but remained well above the National
Bank of Rwanda (NBR) target range in the first half of 2023,
despite a tightening of monetary policy since January 2022.
Rwanda’s current account deficit improved in 2022, with
higher export revenues and remittances outweighing rising
import prices. The fiscal deficit narrowed in FY2022-23
thanks to a large decline in public spending, and strong
growth which combined to reduce Rwanda’s debt as a share of
GDP. Prospects for continued high growth are good, and the
fiscal and debt positions are expected to improve over the
next few years. The special topic emphasizes the large size
of FDI inflows, encouraged by a favorable regulatory
environment and improvements in governance. FDI in Rwanda
appears to generate significant employment benefits, both in
terms of job creation by FDI firms and related increases in
hiring by domestic firms. FDI firms also appear to have
strong linkages with local firms, particularly domestic
suppliers, and tend to provide higher-quality jobs than
domestic firms, in terms of access to social security.
However, forecasts of the volume of inflows and of
employment provided when registering with the Rwanda
Development Board turned out to be highly optimistic,
raising concerns on both limits on FDI firms and the
potential for misrepresentation to gain access to
incentives. FDI projects tend to be concentrated in Kigali
and surrounding districts, which have much lower poverty
rates than the national average, and in general there is a
negative association between the level of poverty and FDI
inflows. Policies to improve the impact of FDI on
inclusiveness could involve encouraging FDI projects in
poorer districts, promoting greater participation by women
and youths, enhancing corporate social responsibility
initiatives, strengthening the monitoring and ex post
performance assessment of FDI, improving linkages between
FDI projects and domestic suppliers, and encouraging the
home country of investors to enforce mandatory standards
that enhance the sustainability and inclusivity of FDI. |
format |
Report |
topic_facet |
MACROECONOMY FOREIGN DIRECT INVESTMENT FDI GDP JOB CREATION |
author |
World Bank |
author_facet |
World Bank |
author_sort |
World Bank |
title |
Rwanda Economic Update, June 2023 |
title_short |
Rwanda Economic Update, June 2023 |
title_full |
Rwanda Economic Update, June 2023 |
title_fullStr |
Rwanda Economic Update, June 2023 |
title_full_unstemmed |
Rwanda Economic Update, June 2023 |
title_sort |
rwanda economic update, june 2023 |
publisher |
Washington, DC: World Bank |
publishDate |
2023-07-11 |
url |
http://documents.worldbank.org/curated/en/099070923155527476/P17745709838710d3087f70cae21a865046 https://openknowledge.worldbank.org/handle/10986/39975 |
work_keys_str_mv |
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