Rwanda Business Forecast Report Q4 2012

Executive Summary
Core Views
Key Risks To Outlook

Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Kagame Losing His Grip?
Evidence that Rwanda is supporting an armed mutiny in the Democratic Republic of the Congo raises the question of why Rwanda
would engage in such a risky strategy After years of rapprochement between the two neighbours, it is not clear why Kigali would allow
its territory to be used to sponsor a dangerously destabilising rebellion Looking at several possible explanations, BMI suggests that a
section of the Rwandan security services may be acting without proper authorisation If true, this would suggest that the situation could
escalate rapidly

Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Fiscal Policy
Fiscal Deficit To Narrow, Aid Dependence Remains Key Risk
New data from the Rwandan ministry of finance have led us to forecast that the Rwandan government will run a small fiscal deficit in
2012, but that this will narrow over the coming years Despite impressive efforts to boost domestic revenue, however, we believe that
Rwanda will remain reliant on foreign aid to fund government expenditure This dependency puts Kigali at the mercy of its donors, and
in the context of the current political situation, this will pose a major risk to our outlook
Economic Activity
Growth To Continue, Risks Mounting
We have revised our real GDP growth forecasts for 2012 and 2013 from 7 5% for both years to 7 1% and 7 4%, respectively This is
due to slightly higher inflation cutting domestic consumption and a freeze on some aid slowing government spending While we currently
forecast that growth will average 7 0% over our 2012-2016 forecast period, we stress that the risks to Rwanda's continued economic
growth are increasing, due to rising tensions with the neighbouring Democratic Republic of the Congo
Regional Outlook
Collateral Damage: The Eurozone Crisis In Africa
While we believe that the eurozone will continue its 'muddle-through' trajectory, BMI acknowledges that a more dramatic deterioration
remains possible In providing an overview of how such a crash would affect different African economies, we select those we believe
would be most or least vulnerable to European contagion We identify Francophone West Africa, the Maghreb states, South Africa,
Mozambique, and South Sudan as especially vulnerable to the fallout of any deterioration in the European crisis While no African
market would be unaffected, we identify Angola, Nigeria, Zambia, and the East African Community states as weathering the storm
comparatively well
TABLE: DANGEROUS DEPENDENCE
TABLE: THE SCOREBOARD

Chapter 3: BMI Global Assumptions
Global Outlook
A Pivotal Autumn Approaches
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES REAL GDP GROWTH FORECAST
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST 23