, NAIROBI, Kenya, Oct 31 – Kenya’s economy is projected to grow by 6 percent in 2017 up from 5.6 percent registered in 2015.
This is according to the World Bank’s country Economic Update report which considers Kenya one of the bright spots in Sub-Saharan Africa outgrowing the 2016 regional average of 1.7 percent.
The report titled – Beyond Resilience – identifies a vibrant services sector, robust construction industry, low inflation, currency stability and low fuel prices as factors underpinning Kenya’s economic growth of 5.9 percent in 2016.
Diarietou Gaye, World Bank Country Director for Kenya, said the prevailing macroeconomic stability means that Kenyans can now enjoy more stable prices for essentials like food, fuel, housing and transportation.
The Bank says the economy has largely been fueled by consumption and public investment.
“Per capita income has grown from 800$ to 1400$ in five years leading to a higher disposable income,” said Allen Dennis, Senior Economist at the World Bank.
The report notes private consumption, which accounts for over 70 percent of GDP, picked-up in 2015 on account of rising employment, a boost to real incomes as oil prices declined, and a rise in remittances, standing at $1.6B annually.
However, despite the gains, Kenya’s GDP growth still lags neighbors Tanzania, Ethiopia and Rwanda, and is below the 8.7 percent target outlined in the government’s medium-term plan needed to push the country to an upper-middle income economy.
The Bank cautions the country needs to manage risks that may arise such as a subdued global economy and domestic shocks such as adverse weather conditions to sustain the growth.
Kenya is also likely to experience Brexit aftershocks in the coming months with trade and tourism likely to be most affected.
“We estimate that the volume of Kenya’s total merchandaise trade will be lower by between 0.6 and 1.7 percent over a 15-year period compared to UK in the European Union status,” states the report.
Other areas that may be hit by Brexit include remittances, capital flows and indirect effects through financial markets.
Although investment in public infrastructure has been a key contributor to the economic growth, the productivity of these investments has stagnated from 2013.
“Causes of declining efficiency of investment can be attributed to weakness in the system of public investment management, the process of land acquisition, among other factors,” states the report.