NAIROBI, Kenya, Apr 12 – The World Bank has downgraded Kenya’s 2017 economic prospects from 6 percent to 5.5 percent due to drought which has led to crop failure and a slowing down of credit to the private sector.
The Bank also says the rising global oil prices may reverse the gains Kenya made in reducing the import bill and improvements in the trade deficit.
World Bank Country Director Diarietou Gaye says prudent microeconomic policies will help safeguard the economy.
She says fiscal consolidation needs to be implemented in such a way not to compromise development spending as well as reducing public sector borrowing.
“Due to emerging headwinds, economic activity in Kenya will encounter some speed bumps in the near to medium term which will likely impact MTP (Medium Term Plan)-II implementation and should inform the scope of the MTP III,” notes Gaye.
However, the Bank says the completion of phase one of the Standard Gauge Railway and the strengthening of the global economy is expected to buffer the Kenya economy from the headwinds.
World Bank predicts a turnaround in 2019, with the economy projected to grow at 6.1 percent.