The country’s economic growth prospect has been projected to a pace of 5.6 per cent this year by the African Development Bank (AfDB).
In its revised regional economic outlook for the year 2023, the lender maintains that the country will experience rebound growth which will be driven by growth in services and household consumption.
Compared to last year, it is an upward projection, the lender having projected the GDP growth at 5.5 per cent.
"The economy is expected to rebound further next year, growing at 6.0 per cent," AfDB says.
It says the projected growth in services and household consumption will be on the back of a projected decline in overall inflation which is expected to ease in 2024.
“Average annual Inflation rose to 7.6 per cent last year, from 6.1 per cent in 2021, driven by food and energy inflation. The headline mark is projected to rise to 8.6 per cent this year and ease to 5.9 per cent in 2024,” AfDB says.
The lender further says the country’s monetary policy is expected to remain tight and the fiscal deficit to narrow from 6.3 per cent of GDP last year, to 6.1 per cent this year, and 5.4 per cent in 2024.
“Current account deficit is projected to narrow from 6.0 to 5.2 per cent of GDP this year and 5.0 per cent in 2024, attributable to a recovery in global demand.”
However, the lender says the outlook projections is subject to considerable risks, including effects of a prolongament of Russia’s invasion of Ukraine on commodity prices, tight global financing, drought and slow global economic recovery.
It says for Kenya to cushion itself from such effects, it would have to diversify its exports and market destinations, enhance domestic resource mobilisation, deepen financial sector reforms, and accelerate structural reforms.
Regionally, East Africa’s economic growth is projected to accelerate from 4.4 per cent last year to 5.1 per cent this year, and 5.8 per cent in 2024.
The projection is expected to be the highest highest compared to the other regions: Central Africa, North Africa, Southern Africa and West Africa.
They have been projected to a pace of 4.9, 4.6, 1.6 and 3.9 per cent, respectively.
AfDB says growth in the East African region will be driven largely by a rebound in economic growth in Uganda (6.5 per cent), Ethiopia (5.8 per cent), Kenya (5.6 per cent), Djibouti (5.4 per cent) and Tanzania (5.3 per cent).
