Kenya economy to grow by over 5pc in 2018 – Genghis Capital

February 20, 2018
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Positive performance in the agricultural sector and continued rebound in service sectors will contribute to this growth/FILE

, NAIROBI, Kenya, Feb 20 – Genghis Capital has forecasted Kenya’s real GDP between 5.25pc and 5.75pc this year.

The growth will be bolstered by the rebound of the private sector and an increase in public investment. Positive performance in the agricultural sector and continued rebound in service sectors will also contribute to this growth.

Analysts at Genghis, however, see risks in a protracted low private sector credit growth and public finance skewed to recurrent expenditure, carrying over from 2017 which saw growth slump to 5 percent from an average of 5.7 percent.

“This halted growth was on account of various factors including a protracted electioneering period, a slowdown in private sector growth and drought that hampered the agricultural sector.

Genghis capital says credit growth to the sector was impeded, first by the structural banking weakness in the third quarter of 2015 and by the implementation of the interest rate cap.

As such, there were delays in significant payment in the manufacturing sector, building approvals and availability of alternative external financing for key private sector projects.

On the protracted electioneering period, the overall impact was a delay in government spending – absorption rate of national govt funds trailed at 29.36 percent in the first 5 months then the county govts suffered delay setbacks in the same period.

Kenya’s growth is against a global growth which is forecasted at 3.90 percent driven by an uptick in activity and accommodative financial conditions.

Sub Saharan growth is expected to hit 3.30 percent in the year propelled by a few one-off drivers such as the recovery in Nigeria oil production.

On the flip side, delays on implementing policy adjustments pose a major risk on the sub Saharan region.

 

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