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Kenya is expected to experience strong economic growth in the coming years, despite a recent period of decelerating inflation, according to a March 2024 BMI report.
The country has seen a decrease in inflation rates, which is likely to result in lower prices for consumers and businesses.
The decrease in inflation is largely attributed to the government’s efforts to control food prices, which make up a significant portion of the inflation index. Additionally, the central bank has been implementing measures to stabilize the economy and support growth.
With inflation under control, Kenya is expected to see increased consumer spending and business investment, which will drive economic growth. The country’s diverse economy, which includes agriculture, manufacturing, tourism, and technology sectors, is well-positioned to capitalize on these opportunities.
Overall, Kenya’s prospects for strong economic growth are promising, and the country is expected to continue on a positive trajectory in the coming years.
“We project that real GDP growth will remain at 5.5% in 2024, as recovering private consumption and strong investor confidence drive growth,” it noted.
Moreover, Kenya’s successful USD1.5bn Eurobond issuance in February will have bolstered investor positioning towards the country.
Similarly, a stronger shilling compared to 2023, as well as robust food supply will also play a pivotal role in the country’s recovery journey as the EAC powerhouse continues to rebound from drought conditions, will see inflation decelerate to 4.6% by year-end.
This is below the midpoint of the Central Bank of Kenya 2.5-7.5% target range and will support purchasing power and boost household spending.
Kenya’s overall inflation declined further to 5.7 per cent in March 2024 from 6.3 per cent in February, driven by lower food and fuel inflation. The apex bank noted inflationary pressure had further eased with core inflation — non-food, non-fuel inflation declining.
The Central Bank of Kenya (CBK) has left its benchmark lending rate unchanged at 13 per cent with inflation having retreated last month.
The Monetary Policy Committee (MPC) noted that inflation is expected to remain within the target range, supported by lower food prices with the expected improved supply.