Rwandan Economy Falls Into Its First Recession

The COVID-19 pandemic has pushed the Rwandan economy into recession, with huge implications of reversing gains already made in its poverty reduction schemes.

This was disclosed in the 16th edition of the World Bank Rwanda Economic Update, with the country’s gross domestic product (GDP) estimated to have dropped by 0.2 percent in 2020, compared to a projected expansion of 8 percent before the COVID-19 outbreak.

According to the update report; “This dire economic effect has severely adverse implications for households, as thousands are facing unemployment, revenue losses and increased consumption prices are pushed into poverty.

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“The Economic Update estimates that, because of the lockdown, social distancing, and increased costs associated with the pandemic, the poverty headcount is likely to rise by 5.1 percentage points (more than 550,000 people) in 2021, with more than 80 percent of the new poor in rural areas.

“In the absence of decisive actions, the adverse effects on education and health, have the potential to reduce long-term productivity and slow down the country’s long-term growth potential.

The long closure of schools and lower household income are likely to reduce school enrollment, as many students seek employment.

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“An estimated 3.5 million students have been out of school, and statistics indicate that the share of students in total employment increased from 3.4 percent in February 2020 to 8.8 percent in August 2020.”