Growth recovery in 2014 is certainlygood news. This time last year, we estimated the 2014 growthrate at 5.7 percent. Against all odds, the economy grew by 7percent. However,growth outlook is not entirely bright.While the oil price decline has brought a positive impactoninflation and trade, recent economic indicators show someweaknesses. Also, global risks (e.g.,an increase in USinterest rate, slowdown of Chinese and Euro economies, andan appreciationof the US dollar) are emerging. In the mediumto long-term, Rwanda’s economic resiliencewill not beachieved without keeping high investment rates. However, thecurrent investmentmodel (high public investment funded byaid) is not likely to be sustainable; givencapacityconstraints to maintain high public investment andpossible decline in aid relative to GDP inthe medium-term.Finding alternative sources of development financing is akey determinantof future growth. Development of thefinancial sector is critical to mobilize both domesticandforeign saving for financing development. This is themessage of the Eighth Edition of theRwanda Economic Update (REU).
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