NAIROBI, Kenya, Mar 24 – Kenya’s economic growth is expected to decline significantly this year, owing to the coronavirus pandemic currently dealing heavy blows to the economy.
This is according to Central Bank of Kenya which has revised the projected economic growth from an initial 6.2 percent to 3.4 percent, due to reduced demand by Kenya’s main trading partners, disruptions of supply chains and domestic production.
“The fundamental concerns and anxieties centre on the health impact, job losses, and duration of the crisis,” CBK’s Monetary Policy Committee said in a statement.
Already, massive job cuts and or pay cuts are looming. For instance, the national carrier Kenya Airways announced Saturday that it was cutting salaries of all workers starting April, to combat a slump in revenue amid the pandemic.
The foreign exchange market has also recently experienced some volatility largely due to uncertainties with regard to the impact of COVID-19 and a significant strengthening of the US dollar in the global markets.
The revision on the economy’s growth estimates come at the back of CBK’s efforts of supporting the economy, amid a looming health crisis, which is fast becoming a severe economic and financial crisis.
On Monday, CBK cut its benchmark lending rate by 100 basis points to 7.25 percent, and reduced the cash holdings requirements for banks to protect the economy from an economic downturn caused by the novel coronavirus.
Analysts at Genghis Capital had anticipated the reduction on the lending rate on the back of mounting global risks, but said the cut would not bear the intended consequences on the economy.