NAIROBI: The International Monetary Fund (IMF) is forecasting 6.5 per cent economic growth for Kenya in 2015, a rare concurrence with the government’s prediction.
National Treasury Cabinet secretary Henry Rotich said on Wednesday the economy is expected to grow by at least 6.5 per cent this year, supported by continued infrastructure spending in rail, road and port development, and improved agricultural activities with favourable weather.
IMF also credited rising infrastructure investments for the high growth. According to the head of an IMF team visiting Kenya, Mauro Mecagni, the country’s gross domestic product (GDP) grew by 5.3 per cent in 2014 from 5.7 per cent in 2013 due to a slowdown in tourism and drought.
“Kenya’s economy remains resilient in the face of headwinds, with real GDP projected to grow by around 6.5 per cent in 2015, supported by rising infrastructure investments, lower energy prices and a dynamic private investment environment,” said Mecagni.
The economy has been struggling because of attacks by al Shabaab militants that have scared away tourists, coupled by persistent drought that has reduced farm output.
Speaking during the signing of a financing deal with the Arab Bank for Economic Development in Africa, Rotich said Kenya’s economy continues to be resilient despite the terrorist attacks that have affected the tourism sector negatively, adding that GDP grew by 5.3 per cent in 2014 which compares favourably with advanced economies.
He said Kenya has continued to preserve macro-economic stability with inflation, interest and exchange rates largely stable. “We will also continue to improve the business environment so as to bolster foreign direct investment, which is critical to accelerating growth and job creation for the youth,” said the CS.
But even as that happens the World Bank has predicted that the economy will growth at 6 per cent. “The economy is growing faster than many of its peers in the region, with expansion pegged at 6.6 per cent in 2016 and seven per cent the following year,” World Bank said in March 2015.
Kenya attained a lower-middle-income status and became the fifth-largest economy in sub-Saharan Africa last year after the Kenya National Bureau of Statistics revised the method for calculating GDP, increasing the size of the economy by a quarter.
China is helping finance and build a Sh350 billion standard-gauge railway from the port of Mombasa, East Africa’s busiest, to Nairobi, in what the government has described as part of the largest infrastructure project in 50 years since the country gained independence.
The State also targets to boost installed power-generation capacity to 5,000 megawatts by 2017. However, risks to the outlook include the threat of insecurity, which has hurt tourism a key source of foreign exchange and pressure on the budget deficit as the government increases spending, the World Bank said. The Kenya shilling has also weakened 5.6 per cent against the dollar since the beginning of the year, after declining five per cent in 2014.
