Kenya Economic Forecast

Kenya Economic Outlook

April 16, 2019

Available data suggests the economy lost steam in Q1 2019. Private credit growth continued to fall in the first two months of the year, likely weighing on private consumption and investment. While the Nairobi High Court ruled the long-standing interest rate cap as unconstitutional last month, some MPs plan to battle hard to uphold the law in the 12-month window awarded to parliament to amend it. Moreover, a decline in remittances in February also likely constrained household spending, while the PMI fell throughout Q1 as weaker domestic demand curbed overall private sector activity. External sector metrics also point to a slowdown: Exports fell sharply in February amid cooling global growth, translating into a wider trade deficit as imports accelerated. Meanwhile, the Treasury recently unveiled plans to issue a third Eurobond to raise USD 2.5 billion to meet debt repayments due in June, signalling deteriorating debt dynamics.

Kenya Economic Growth

Despite signs that growth slowed in Q1, the economy will likely sustain a strong pace of expansion this year, thanks to large-scale infrastructure projects under the “Big Four Agenda” and an acceleration in exports driving an upturn in the external sector. That said, the interest rate cap will likely continue limiting the growth of private consumption and fixed investment. FocusEconomics analysts project GDP growth of 5.8% in 2019, which is unchanged from last month’s forecast, and 5.7% in 2020.

Kenya Economy Data

20132014201520162017
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 %)5.95.45.75.94.9
Consumption (annual variation in %)8.44.35.24.77.0
Investment (annual variation in %)2.114.26.6-9.46.3
Industrial Production (annual variation in %)5.45.66.16.04.9
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)7.26.08.06.44.5
Inflation Rate (CPI, annual variation in %)5.76.96.66.38.0
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)5.96.15.95.75.7
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)6.67.97.57.67.3
External Debt (% of GDP)19.321.024.931.330.5

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Kenya Facts

ValueChangeDate
Bond Yield12.150.0 %Apr 18
Exchange Rate101.40.05 %Apr 22
Stock Market0.10.0 %Apr 22

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