Kenya’s economy tipped to grow 6pc in 2019

By Steve UMIDHA On Jul 25, 2019

Kenya’s economy is likely to grow by at least 6 per cent this year, according to Central Bank of Kenya – with the regulator tipping stronger-than-expected recovery in agriculture sector to attribute to that growth.

Kenya’s economy grew by 5.6 per cent in the first quarter of the year, slowing from 6.5 per cent in the same period a year earlier, mainly due to the impact of dry weather.

But the rains unexpectedly came in late April, brightening the outlook for the economy.

“Real GDP growth stood at 5.6 percent, reflecting a stronger than expected performance of agriculture and a resilient services sector, particularly information and communication, accommodation and restaurants, and transport and storage. Leading indicators of economic activity point to stronger growth in the second quarter of 2019,” noted the CBK Governor Dr. Patrick Njoroge.

Adding that, “Consequently, growth in 2019 is expected to remain strong, supported by agricultural production, strong growth of MSMEs and the service sector, foreign direct investment, and a stable macroeconomic environment. Additionally, the alignment of the FY2019/20 Government Budget to the Big 4 priority sectors is expected to boost economic activity in manufacturing, agriculture, construction and real estate, and health sectors.”

The MPC Private Sector Market Perception Survey conducted in July 2019 indicates that inflation expectations remain well anchored within the target range, mainly due to expectations of lower food prices following improved weather conditions.

The Survey also shows increased optimism that economic growth will remain strong in 2019 due to, among other factors, continuing payment of pending bills, implementation of the Big 4 projects, improved weather conditions, ongoing public infrastructure investments, expected growth in tourism, and a stable macroeconomic environment.

However, the optimism is tempered by the slow growth in private sector credit and concerns on the volatility of international oil prices.