NAIROBI: Kenya could surmount the foreign exchange and interest rate pressure to record an economic growth of about 6.1 per cent, the highest since 2011, an analysis by leading banks, consultancies and think tanks indicates.
The report by Focus Economics, a Barcelona-based economic analysis firm that compiles macroeconomic forecasts around the world, shows that only five African countries are likely to record stronger growth than Kenya this year.
They are DRC (8.4 per cent), Ethiopia (8.1 per cent), Ivory Coast (8.0 per cent), Tanzania (6.9 per cent) and Mozambique (6.8 per cent). “Economic growth is projected to speed up this year, helped by infrastructure development, robust private consumption and exports,” FocusEconomics says in its August report on Kenya.
“However, security concerns pose a downside risk to growth as the tourism sector is an important pillar of the economy and one of the main sources of foreign exchange.” Perceptions of insecurity have troubled Kenya since 2013, hurting tourism and slowing investments which are key to generating more national wealth.
The report is based on growth projections from world’s giant lenders HSBC of UK, BNP Paribas of France, JPMorgan of the US, Standard Chartered Bank of the UK and New York-based brokerage firm Citigroup Global Markets. Others are Fitch Ratings-owned BMI Research, consultancy firm Capital Economics of UK, Washington- headquartered Frontier Strategy, Economist Intelligence Unit, credit insurance firm Euler Hermes of France and Oxford Economics, the Oxford University’s economic forecasting arm.
Citigroup Global Markets has projected the highest growth of 7.3 per cent among the 11 companies, while Euler Hermes’ 5.8 per cent is the lowest. Growth was last year largely undermined by poor performance in agriculture due to low rainfall, while security concerns almost crippled the tourism sector.
In the first quarter of this year, the economy expanded by 4.9 per cent from 5.1 per cent in the fourth quarter of last year, data by the Kenya National Bureau of Statistics showed. This was followed slower growth in building and construction, ICT and mining sectors.
The accommodation and restaurants was the only segment whose growth slumped, signifying the struggles in the tourism sector over the last four years. “While growth of the hefty agricultural sector sped up in the first quarter, the tourism sector contracted again, albeit at a softer pace than in quarter four(of 2014),” the report says.
Estimates from the analysis indicate that GDP expanded by 5.2 per cent between April and June, and is projected at 6.2 per cent for the third quarter ending this month and 6.5 per cent in the fourth quarter. “FocusEconomics Consensus Forecast panelists expect inflation to average 6.6 per cent in 2015, which is up 0.4 percentage points from last month’s forecast.”
