April 12, 2018—Kenya’s GDP growth is projected to recover to 5.5pc in 2018 up from an estimated 4.8pc in 2017.
According to the World Bank’s 17th Kenya Economic Update (KEU) launched in Nairobi in mid-week, over the medium term, economic activity is expected to gain momentum, steadily rising to 6.1pc by 2020.
Diarietou Gaye, the World Bank Country Director for Kenya said, “Policy initiatives to spur credit growth to the private sector and ongoing efforts to reduce the deficit are critical to safeguard macroeconomic stability and support the recovery of the Kenyan economy.”
The positive outlook is underpinned by recovering agricultural output (thanks to favorable rains); the easing of political uncertainty which is lifting business sentiment; and a broad-based strengthening of the global economy. However, partially mitigating these favorable factors is the drag to growth coming from still weak private sector credit growth, the expected downsizing of the fiscal stimulus from previous years and higher oil prices.
The government has announced an ambitious development agenda for the next 5 years anchored on ‘the Big 4’: deliver affordable housing, roll-out universal health coverage, increase the share of manufacturing in the economy and improve food security. For the Big 4 to be realized, support from both the public and especially the private sector will be required.
Allen Dennis, the World Bank Senior Economist and Lead Author of the KEU said, “Policy reforms can play an important catalytic role in incentivizing private sector resources to advance the Big 4.”
The second special section of the Update also reports on the macroeconomic drivers of and trends in poverty reduction in Kenya assessed against international benchmarks. “Currently one out three Kenyans live below the international poverty line of $1.90 per day (in 2011 PPP): the poverty rate declined from 43.6 pc in 2005/06 to 35.6pc in 2015/16,” Utz Pape, the World Bank Economist and author of the KEU special section on poverty said.
He said, “Poverty in Kenya declined substantially over the past decade, especially among households engaged in agriculture, but these remain vulnerable to climate and price shocks.”