NAIROBI, Kenya, Apr 17 – East Africa may record the best economic growth in the continent in 2009 with Kenya reporting 5.5 percent growth as opposed to the 3.5 percent predicted by the Central Bank of Kenya recently.
Chief Economist at the African Development Bank (AfDB) Louis Kasekende said on Friday that this growth would be pegged on agricultural export trade, with the agricultural and manufacturing sectors holding the candle for Kenya.
“Countries like Uganda have already predicted a 6 percent growth and despite Kenya’s initial envisaged growth being less optimistic, I think it will range between 5 and 5.5 percent,” Mr Kasekende expressed.
He noted that this positive prediction was despite the current drought and famine being experienced in the country.
The economist explained that Kenya especially does not depend on any minerals as a source of revenue unlike other countries in the region and are thus feeling the repercussions.
“In the first round of the crunch the region was negatively affected because of the drop in tourism, dwindling remittances and massive withdrawal by foreign investors from the stock markets,” Mr Kasekende said.
He however observed that Kenya did not do too badly economically in 2008 despite the political skirmishes at the beginning of the year.
Kenya posted a 4.5 percent economic growth in 2008 compared to 6.5 percent in 2007.
Meanwhile, Mr Kasekende has warned that a financial stimulus package may not be the best solution for countries that are reeling from the negative effects of the global economic crunch.
“There are very few countries in Africa with the room and the capacity to use fiscal stimulus packages. You cannot expect a country with dwindling revenues to effectively implement a stimulus package.”
He said that the AfDB is seriously cautioning countries from going this way.
The economist noted that Kenya had chosen to go on with its infrastructure investments despite the global crunch by tapping into the domestic market, something which the ADB is watching keenly.
Mr Kasekende was speaking during a validation workshop by the bank that will assist it in narrowing down on priority areas for the bank in the region.