Kenya Economic Forecast

Kenya Economic Outlook

January 22, 2019

The economy likely lost traction again in the final quarter of 2018 after expanding at a robust, albeit softening, pace in the third quarter on strong agricultural and hydro-powered electricity output. Rising inflation, a continued slowdown in remittance inflows and weaker credit growth likely weighed on private consumption in Q3. Entering the fourth quarter, a pick-up in remittances and an acceleration in credit in October likely stimulated greater household spending. Moreover, PMI readings for Q4 indicate private sector activity remained resilient. On the downside, gloomy corporate earnings and job cuts prompted the Kenya Revenue Authority to reduce its revenue target for the current fiscal year by 5.0%. In other news, a hotel and office complex in the capital came under attack from Al-Shabaab militants on 15 January; the latest in a wave of terrorist activity across the continent that threatens to undermine foreign investment and the tourism sector.

Kenya Economic Growth

Growth is expected to remain strong in 2019, thanks to solid domestic demand. Private consumption should continue to expand at a healthy pace, buoyed by solid remittances inflows and a tight labor market, while upbeat business confidence should continue to support strong fixed investment growth. The continuation of the interest rate cap on commercial bank lending rates will likely curb the availability of credit, however, and hamper the government’s ability to secure additional financing from the IMF. FocusEconomics analysts project GDP growth of 5.9% in 2019, which is up 0.1 percentage points from last month’s forecast, and 5.7% in 2020.

Kenya Economy Data

Population (million)41.843.044.245.546.7
GDP per capita (USD)1,3221,4341,4331,5661,599
GDP (USD bn)55.361.763.371.274.7
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Fiscal Balance (% of GDP)-6.8-7.0-9.6-8.0-9.5
Public Debt (% of GDP)44.545.950.253.259.0
Money (annual variation in %)14.518.612.84.87.5
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Exchange Rate (vs USD)86.4590.55102.3102.5103.2
Policy Interest Rate (%)8.508.5011.5010.0010.00
Exchange Rate (vs USD, aop)86.1387.9598.27101.5103.4
Current Account (% of GDP)-8.1-9.7-6.8-5.1-6.8
Current Account Balance (USD bn)-4.5-6.0-4.3-3.7-5.1
Trade Balance (USD billion)-10.5-12.4-10.1-7.9-10.9
Exports (USD billion)
Imports (USD billion)16.418.515.913.616.6
Exports (annual variation in %)-4.02.7-3.4-2.40.2
Imports (annual variation in %)0.412.6-13.8-14.422.0
International Reserves (USD)
External Debt (% of GDP)19.321.024.931.330.5

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Kenya Facts

Bond Yield12.510.0 %Feb 14
Exchange Rate100.20.05 %Feb 14
Stock Market0.10.0 %Feb 14

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