Kenya Economic Forecast

Kenya Economic Outlook

December 13, 2019

Growth seems to have remained firm in the third quarter, on the heels of a robust second quarter. Private sector activity was likely more upbeat in Q3, as reflected by the PMI averaging higher compared to the prior quarter. In particular, the solid pace of job creation in the quarter ought to have supported household consumption. That said, the external sector likely dragged on overall growth as merchandise exports continued to contract. Turning to Q4, incoming data hints at weaker momentum: The PMI deteriorated, on average, in October–November compared to Q3 amid weakened business sentiment, which dropped to a 33-month low in November. Meanwhile, at the conclusion of its 18-22 November visit, the IMF praised Kenya’s recent economic performance and removal of the interest rate cap. It also hinted at further discussions for a new precautionary stand-by arrangement in early 2020, which would help cushion the economy from exogenous shocks.

Kenya Economic Growth

Economic activity is seen picking up next year amid sturdier domestic demand. Buoyant household consumption is expected to underpin the expansion, while solid public expenditure should provide further support to growth. However, trade war uncertainties, adverse weather conditions and a wide fiscal deficit pose downside risks to the outlook. FocusEconomics analysts project GDP growth of 5.8% in 2020, which is unchanged from last month’s forecast, and 5.6% in 2021.

Kenya Economy Data

20142015201620172018
Population (million)41.843.044.245.546.7
GDP per capita (USD)1,3221,4341,4331,5281,681
GDP (USD bn)55.361.763.369.578.5
Economic Growth (GDP, annual variation in %)5.95.45.75.94.9
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)2.114.26.6-9.26.4
Industrial Production (annual variation in %)5.45.66.16.14.8
Fiscal Balance (% of GDP)-9.3-5.8-8.1-7.7-8.8
Public Debt (% of GDP)44.545.950.254.556.1
Money (annual variation in %)14.518.614.24.27.4
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
Policy Interest Rate (%)8.508.5011.5010.0010.00
Exchange Rate (vs USD)86.4590.55102.3102.5103.2
Exchange Rate (vs USD, aop)86.1387.9598.27101.5103.4
Current Account (% of GDP)-8.8-10.3-6.8-4.9-6.2
Current Account Balance (USD bn)-4.8-6.4-4.3-3.4-4.9
Trade Balance (USD billion)-10.2-10.9-8.5-7.7-10.3
Exports (USD billion)5.96.15.95.75.7
Imports (USD billion)16.116.914.313.416.0
Exports (annual variation in %)-4.02.7-3.4-2.40.2
Imports (annual variation in %)3.65.2-15.2-6.519.2
International Reserves (USD)6.67.97.57.67.3
External Debt (% of GDP)25.027.531.232.133.6

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Kenya Facts

ValueChangeDate
Bond Yield12.200.0 %Dec 31
Exchange Rate101.40.05 %Jan 01
Stock Market0.40.0 %Jan 07

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Kenya Economic News

  • Kenya: PMI ticks up in December

    January 6, 2020

    The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—came in at 53.3 in December, up from November’s 53.2 reading and thus climbing further above the 50-threshold that indicates an improvement in business conditions. New orders rose sharply in December amid increased referrals from clients as did new export orders on stronger demand from European markets.

    Read more

  • Kenya: PMI stable in November

    December 4, 2019

    The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—came in at 53.2 in November, matching October’s reading, thus staying above the critical 50-threshold that separates expansion from contraction and signaling a healthy rate of growth in activity.

    Read more

  • Kenya: Inflation rises in November

    November 30, 2019

    Consumer prices rose 0.41% over the previous month in November, up from October’s 0.28% increase.

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  • Kenya: Central Bank slashes rates in November

    November 25, 2019

    At its meeting on 25 November, the Monetary Policy Committee (MPC) of Kenya’s Central Bank decided to axe the central bank rate by 50 basis points to 8.50%, marking the first cut in 16 months.

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  • Kenya: PMI dips in October

    November 5, 2019

    The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—fell to 53.2 in October from 54.1 in September, thus moving closer to the critical 50-threshold that separates expansion from contraction and signaling a softer pace of growth in activity.

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