Kenya’s economy expected to recover in 2018

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Kenya’s economy is expected to rebound to between 5.3 and 5.8% in 2018 up from 4.7% in 2017 due to drought and a prolonged electioneering period, a local investment bank said on Tuesday.

The economy grew 5.8% in 2016. Kenya’s finance ministry has predicted a similar growth but warned that weather conditions and public expenditure are likely to affect growth.

Economic growth in 2017 slowed down to below 5%, from an average of 5.7% in the period between 2012 and 2016.

Investment analysts are linking the decline to a protracted electioneering period.

Investment analyst Churchill Ogutu says: “There was a wait and see approach by the investors that had a great impact on the overall GDP in the economy.”

The agricultural sector, one of the backbones of the country’s economy grew just 0.81% in nine months of last year, compared to 4.97% in 2016.

The decline is attributed to erratic weather conditions and fall army -worm infestation, which affected produce in Kenya’s cereal growing regions.

Looking ahead, the economy is expected to rebound as normalcy resumes on the political scene.

“We are looking at 5.25% to 5.75% that will also involve a rebound in the private sector; we have seen that reflected between December and January.”

Some of the risks include the continuing slowdown in private sector credit growth due to cap on interest rates as well as increased public spending on recurrent expenditure – which currently stands at 16% of GDP.

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