Kenya Economic Forecast

Kenya Economic Outlook

February 19, 2019

Following a likely moderation in the final quarter of last year, the economy appears to have entered 2019 on a slightly less favorable note. A continued slowdown in remittance inflows, coupled with higher inflationary pressures and a moderation in credit availability in the quarter, likely curbed private spending in Q4. Turning to 2019, the PMI lost ground in January, signaling a weaker pace of expansion in private sector activity. Moreover, the agricultural sector will likely see a fall in output in the coming months owing to the end of the rainy season. On the debt sustainability front, the government plans to refinance the first tranche of maturing Eurobonds—worth USD 750 million—and to raise funds for infrastructure spending through a USD 2.5 billion Eurobond issuance by end-June. Moreover, the country is close to securing an agreement with the IMF on a new standby loan facility, which should also help to bring the public debt burden onto a more sustainable path.

Kenya Economic Growth

Momentum is expected to be sustained in 2019, thanks to healthy domestic demand. Fixed investment growth will likely strengthen on improving business confidence and government spending should pick up on the delivery of President Uhuru Kenyatta’s “Big Four Agenda”. While remittances inflows are expected to remain robust, private consumption growth will likely moderate on rising inflationary pressures and weak credit availability owing to the interest rate cap on commercial bank lending. Met the why particular analysts project GDP growth of 5.8% in 2019, which is down 0.1 percentage points 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
Policy Interest Rate (%)8.508.5011.5011.0011.00
Exchange Rate (vs USD)86.4590.55112.3112.5113.2
Exchange Rate (vs USD, aop)86.1387.9598.27111.5113.4
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)-11.5-12.4-11.1-7.9-11.9
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 Yield12.450.0 %Mar 11
Exchange Rate99.70.05 %Mar 11
Stock Market0.20.0 %Mar 11

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