NAIROBI: The government yesterday cut this year’s economic growth outlook, citing high interest rates and effects of El Niño rains on agricultural production. Treasury CS Henry Rotich said the national wealth was likely to expand by between 5.8 and six per cent, a downgrade from 6.5 per cent in April and 6.9 per cent in January.
The projection is closer to an average of 5.7 per cent by 12 leading global firms, 0.3 percentage points lower than their last month’s average of six per cent. This is contained in a country report released on Tuesday evening by FocusEconomics, a Barcelona-based firm that compiles and analyses macroeconomic data on various countries.
Researchers at FocusEconomics attributed this to high interest regime, the deprecation of the shilling by 12.69 per cent year-through-yesterday’s 102.21 to the dollar and challenges in meeting tax revenue targets.
“Kenya’s economy will likely pick up pace next year on the back of an expansionary fiscal stance, infrastructure development and solid household spending,” they said, projecting a six-per cent growth.
The firm’s analysis relied on projections by HSBC of the UK (unchanged from last month’s 5.1 per cent), BNP Paribas of France (6.5 from 6.9 per cent), JPMorgan of the US (5.2 from 6.4 per cent), Standard Chartered Bank of the UK (unchanged at six per cent) and New York-based brokerage Citigroup Global Markets (flat at 5.5 per cent).
Others are Fitch Ratings-owned BMI Research (unchanged at 6.2 per cent), consultancy firm Capital Economics of the UK (steady at six per cent), Washington-headquartered Frontier Strategy (5.4 from six per cent) and credit insurance firm Euler Hermes of France (flat at six per cent).
The Economist’s Intelligence Unit has kept its forecast at 5.4 per cent while Oxford Economics has cut its outlook this month to 5.3 from 6.1 per cent last month.
Nairobi-based Cytonn Investments has given the lowest growth forecast so far at 4.9 per cent. The World Bank on October 15 also cut Kenya’s growth outlook to 5.4 per cent from six per cent, while the IMF has provisionally slashed it to six from earlier 6.5 per cent in April.
