Kenya Economic Forecast

Kenya Economic Outlook

September 17, 2019

Growth likely remained stable in the second quarter, following a deceleration in the first quarter which saw drought conditions eat into agricultural output. Merchandise exports contracted heavily year-on-year, as the effects of the drought appear to have spilled over into Q2. However, despite the external sector’s downturn, the PMI, on average, remained in expansionary territory in Q2 as firms reported upbeat production and stronger demand. Turning to the third quarter, the PMI for July–August averaged higher than that of Q2 due to upbeat new orders, suggesting that private sector activity remained resilient. That said, limited access to credit continued to thwart business sentiment. Meanwhile, in politics, the government’s plan to boost credit access for SMEs by repealing an interest rate capping law was blocked by the opposition in early September on grounds it would raise borrowing costs.

Kenya Economic Growth

Growth is expected to ease this year as erratic weather conditions weigh on agricultural output and, in turn, on household spending. Nevertheless, upbeat fixed investment should support growth this year and next, as the government moves forward with its “Big Four Agenda” infrastructure projects. The sizeable fiscal deficit remains a concern, however. FocusEconomics analysts project GDP growth of 5.6% in 2019 and 5.7% in 2020, which is unchanged from last month’s forecast.

Kenya Economy Data

20132014201520162017
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 Yield11.500.0 %Sep 04
Exchange Rate103.90.05 %Sep 04
Stock Market0.40.0 %Sep 04

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