Kenya growth to hit 5.7pc on investments rebound

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Kenya’s economy is likely to expand by between 5.25 per cent and 5.75 per cent in 2018 on a rebound in public and private investments and improved farming activities, research analysts at Genghis Capital projected Wednesday.

The analysts also see recovery in service sectors boost growth this year after slowing down to a five-year low.

The economy is estimated to have expanded by 4.8 per cent from 5.8 per cent last year following a bruising prolonged presidential poll that delayed investment decisions on the back of a biting drought that hurt farming and credit crunch due to September 2016 rate cap.

“Risks to growth (in 2018) include protracted low private sector credit growth and public finance skewed to recurrent expenditure,” said Genghis in a macroeconomic outlook report.

Improved weather

Economists, except those at Standard Chartered Bank, have projected a growth of above five per cent this year, citing largely improved weather conditions and pick-up in spend by government and companies.

StanChart #ticker:SCBK chief economist for Africa Razia Khan, however, sees the economy growing at 4.6 per cent — a flat performance compared to her estimate of 4.5 per cent last year.

“If you look at the degree of tightening of credit availability in this economy, we can’t assume that the quick fix in addressing tomorrow is going to bring around an instant change in actual economic activity,” said the London-based economist on January 24.

“There are always lags involved in terms of policy decision…and for many frontier economies such as Kenya, that time period remains about 12 months.”

StanChart is the only one to have forecast a growth of below five per cent among 17 domestic and international firms, which have so far released their outlook reports on Kenya.

Barclays Africa Group chief economist Jeff Gable and Stanbic Bank economist for East Africa Jibran Qureishi have projected 5.6 per cent and 5.5 per cent growth, respectively.

World Bank

World Bank Group and African Development Bank have projected a growth of 5.5 and 5.6 per cent, respectively.

A monthly consensus forecast by FocusEconomics — a Barcelona-based economic analysis firm which tracks growth projection from 11 top global banks, consultancies and think-tanks — on Tuesday last week put Kenya’s growth outlook at 5.3 per cent.

Treasury secretary Henry Rotich has projected a growth of between 5.5 and six per cent, while Central Bank of Kenya governor Patrick Njoroge has been the most bullish in his forecast at 6.2 per cent.