Kenya’s economy is seen performing better than most of its peers in Africa this year despite negative effects of drought, squeeze on private sector credit due to caps on interest rates and prolonged political uncertainty, a survey by showed.
Barcelona-based FocusEconomics said a review of forecasts by leading global banks, think-tanks and consultancies showed Kenya’s economic performance would be the fifth best among major economies in sub-Sahara Africa despite the challenges that have seen the country’s growth outlook downgrade for the eighth straight month to 4.8 per cent.
The survey which tracks projections from 11 top global firms, sees Ethiopia (7.3 per cent), Ivory Coast (6.7 per cent), Tanzania (6.3 per cent) and Ghana (6.0 per cent) as the only major economies likely to grow faster than Kenya on the continent.
“Deferred focus on economic policy, overshadowed by prolonged political uncertainties, will exacerbate an already challenging economic situation, which has been under severe strain since the start of the year due to an ongoing drought in the north of the country,” analysts at FocusEconomics said in the report published on Tuesday.
“Reduced economic activity due to falling domestic and external demand amid amplified political tensions, high inflation and rising unemployment are being compounded by the impact of the devastating drought and have already severely dented economic activity”
If the projection comes to pass, it will be the first that the economy will be expanding below five per cent since2012 when growth was 4.6 per cent.
Although Treasury secretary Henry Rotich said last Friday that the government will be slashing its 5.5 per cent pre-election growth outlook on uncertainties as a result of prolonged presidential electioneering period, Central Bank of Kenya governor Patrick Njoroge on Tuesday said growth was unlikely to fall below five per cent.
“We don’t see any factors that would combine to shave growth projections for 2017… let’s say upwards of 0.5 per cent,” Dr Njoroge told a Press conference, citing evenly distributed agriculture-boosting rainfall as forecast by metrological department.
Stanbic Bank (4.8 per cent) and Renaissance Capital (4.9 per cent) are some of the firms that have slashed Kenya’s growth outlook to below five per cent.