NAIROBI: World Bank yesterday said Kenya economy would continue to grow at a robust pace in 2016 despite the weakened shilling, outpacing Nigeria and South Africa, the Sub-Saharan Africa’s two largest economies.
It said Kenya’s growth prospects would be mainly supported by spending on the standard gauge railway and the Lamu Port, which are expected to boost domestic trade by lowering transportation costs.
It however, said the country has taken a hit from a slower growth in China, which has had a significant impact on the demand for exports from Sub-Saharan Africa and the overall growth in the world economy.
“Slower growth in China significantly impacts demand for Sub-Saharan Africa exports… In Kenya, the current account deficit has remained large (nine per cent of gross domestic product), despite the decline in the price of oil, as the downturn in tourism caused by security concerns continued to weigh on export earnings,” it stated in the biannual Africa’s Pulse report.
It states that the region’s growth is projected to slow down to 3.7 per cent in 2015 from 4.6 per cent last year, and countries such as Ethiopia, Mozambique, Rwanda and Tanzania expected to post solid growth.
“External headwinds and domestic difficulties are impacting economic activity in Sub-Saharan Africa. On the external side, the end of the commodity price super cycle, the slowdown of growth in China and tightening global financial conditions are weighing on growth. Domestic challenges, notably electricity supply bottlenecks, have come to the fore more acutely in several countries,” it noted.
According to the report, the rebalancing of China’s economy through increasing its consumption and demand for imported products would lift the Sub-Saharan Africa GDP by 6.1 per cent by 2030.
“Sub-Saharan Africa exports to China are expected to increase by 13.24 per cent by 2030. The countries that are expected to benefit the most from China’s rebalancing are Kenya, Madagascar and Nigeria, with additional GDP gains 7.5, 6.9 and 6.5 per cent, respectively.”
