Kenya’s economy on the right trajectory: WBG consultants.

NAIROBI, Kenya - The World Bank Group has upgraded Kenya’s economy citing the conclusion of the presidential elections petition ruling that validated William Ruto’s victory.

Despite the rising cost of living and growing public debt stress, the country’s economy is expected to expand by 5.5 percent this year.

The survey conducted by 14 world-leading banks and the think tanks under the World Bank Group revealed that the economy shrunk by 0.1 percent during the General Elections period.

Their findings also estimate that Kenya’s economy will likely shade off the historical election anxieties to grow more than five percent for the first time.

However, their survey also pointed out that the growth will be softer than the 7.5 percent projected by the same group last year.

This kind of growth will be impacted by the high cost of living, low rainfall, and weakening shilling against the US dollar in a net importing economy.

The Barcelona-based experts conducted the survey between August 16 and 21. “We have realized that despite softening from 2021, GDP growth will be amongst the strongest in the region this year following several upward revisions from our panelists. The slowdown from 2021 will be partly driven by tighter monetary policy, a weaker shilling, and high inflation; all tempering demand. Additionally, extreme weather events and a higher risk of debt distress are key factors to watch”.

The report shows two of the firms covered in the monthly survey upgraded Kenya’s growth forecast with a similar number trimming the growth outlook.

Those upbeat on growth are Switzerland-based banking group, Julius Baer, which has raised its growth forecast by 1.4 percentage points to 5.5 percent, and London’s Euromonitor International, which sees a 5.8 growth from 5.5 percent previously.

However, Washington-headquartered consultancy FrontierView and Fitch Ratings have both cut forecasts by 0.3 percentage points to 4.0 and 5.7 percent, respectively, according to FocusEconomics.

Economists who have kept their forecast steady are those at Moody’s Analytics (8.8 percent), London’s Standard Chartered (5.5 percent), UK’s Capital Economics (6.3 percent), American investment bank Goldman Sachs (6.2 percent), Paris-based BNP Paribas (5.4 percent) and Fitch Solutions (5.0 percent).

Others are American brokerage house Citigroup Global Markets (5.0 percent), Fitch Solutions (5.0 percent), HSBC (4.6 percent), Economist Intelligence Unit (4.5 percent), and Oxford Economics (4.1 percent).

The consensus forecast matches that of the World Bank Group (in June) but is marginally stronger than the Central Bank of Kenya’s 5.4 percent.
Central Bank of Kenya -Governor Patrick Njoroge said on July 28 “ The forecast is a pretty solid growth in 2022 compared with other economies given the external shocks that we are still navigating through and our own internal shocks that we have to contain.”

During the last election in 2017, economic growth slowed to 3.82 percent from 4.21 percent the year before, while in 2013 it decelerated to 3.80 percent from 4.57 percent, according to GDP figures which have been revised following last year’s rebasing of the economy.

According to Kenya Bankers Association (KBA)- an industry lobby had assessed lower economic risk levels ahead of the August 9 presidential vote compared with previous elections.

KBA chief executive Habil Olaka pointed out that “We have noticed over the last few electoral cycles that there’s a bit of disconnect between the business environment and the cycle where the anticipation of there being disturbances and disruption in the economic activity has become less and less.”

Mr. Olaka further said that “In 2017 there were fewer disruptions and this time we are seeing more economic activity … picking up despite the fact that there is political excitement going on in the run to the elections.”

GAROWE ONLINE