NAIROBI, Kenya, Jul 31 – Central Bank of Kenya projects the country’s economy will grow by 6.2 percent in 2018.
Governor Patrick Njoroge has attributed the significant acceleration in growth to improved weather conditions and a boost in business and consumer confidence following the conclusion of general elections in 2017.
From the supply side, growth has mainly been driven by a recovery in activities of Agriculture as well as improved output in Wholesale and Retail Trade, Manufacturing, and Real Estate sectors.
In the first quarter of 2018 the economy expanded by 5.7 per cent compared to 4.8 per cent in a similar quarter of 2017.
“We are having a good year so far; there is sustained improvements in economic fundamentals, there’s a strong pickup in economic activity and favourable weather conditions among other gains,” Njoroge told a press briefing ion East Africa’s largest capital city.
Quoting a CBK sponsored survey, Njoroge also revealed that credit to the private sector grew by 4.3 per cent in the 12 months to June 2018, compared to 2.8 per cent in April 2018.
This was despite the implementation of the 2016 Banking Act that saw the introduction of the interest rates cap – set at 45 per cent above the CBK rate – that has been making it difficult to lend to the sector.
As such, credit to the manufacturing, building and construction, and trade sectors grew by 12.3 per cent, 13.5 per cent and 8.6 per cent respectively.
However reveals that growth was negative in the transport and communication sector, agriculture, and mining and quarry sector.
“Growth in private sector credit is expected to pick up gradually with the continued recovery of the economy,” he said.
The growth is against a backdrop of a resilient and stable banking sector.
On average, commercial bank’s liquidity and capital adequacy ratios stood at 48 per cent and 18 per cent respectively in June 2018.
Njoroge was speaking following the Monetary Policy Committee meeting yesterday that saw central bank cut its benchmark lending rate to 9.0 percent from 9.50 per cent.