Rwanda 2026/27 Budget Brief

The FY 2026/27 budget continues the gradual normalization of fiscal policy following recent geopolitical, macroeconomic, and climate-related shocks. It prioritizes strategic investments, including the New Kigali International Airport, and targeted interventions such as fertilizer subsidies to mitigate the impact of the ongoing conflict in the Middle East, while remaining committed to fiscal consolidation.

Global highlights

• The global real Gross Domestic Product (GDP) grew at a rate of 3.4% in 2025 matching the growth recorded in 2024. However, the growth experienced in the last two years is under threat from the escalation of conflict in the Middle East which has led to closure of the Strait of Hormuz, a key passage of global oil supplies.
• OECD economies grew by 1.7% in 2025 maintaining a growth trajectory similar to the growth recorded in 2024, primarily driven by investment in technology and digital infrastructure.
• Emerging Markets and Developing Economies (EMDEs) grew by 4.4% in 2025 compared to 4.3% in 2024. The growth in EMDEs was supported by strong domestic demand coupled with easing financial conditions following monetary policy adjustments in advanced economies.
• For the year 2026, it is forecasted that the global economy will continue to stabilize and is projected to slow down to 3.1% and 3.2% in 2027 from an average of 3.4% in 2024 and 2025. The growth will be driven by private consumption and investments. However, while stable the growth is expected to be uneven across regions and countries.
• Global unemployment remained steady and unchanged at 4.9% in 2025 attributed to demographic shifts in high and upper-middle-income economies, where aging populations and slower labour force growth helped to stabilize the unemployment rate.
• Globally, inflation eased to 4.1% in 2025, an improvement from 5.8% in 2024. This is expected to ease to 3.8% in 2026 supported by softer labour market conditions and lower energy prices. This may however be slowed by exerted upward pressure on energy and food prices from the US-Israel-Iran conflict.

Outlook risks

• Rising energy prices could slow global growth to 2.5% by 2026 and push inflation to 5.4%, while damage to energy infrastructure in conflict regions could further reduce growth to around 2% and raise inflation to above 6% by 2027;
• Emerging and developing economies are more likely to face a significant impact compared to advanced economies, and despite ongoing geopolitical escalations, downside risks remain dominant, with potential for worsening tensions, policy shifts, or domestic instability to trigger a major global energy crisis and intensify economic and political pressures.

Please see the link below for our detailed highlights from the budget announcement.