Kenya Economic Forecast

Kenya Economic Outlook

February 20, 2018

An economic recovery is underway, after growth was derailed last year by elevated uncertainty during the prolonged election cycle, a crippling drought that damaged agricultural output, and the government’s ongoing cap on lending rates charged by commercial banks. Economic activity expanded again in January against a backdrop of political stability, evidenced by a PMI reading above the 50-point threshold; the private sector returned to growth in December following seven months of contraction. At the same time, the economy’s public and external debt stocks have been piling up while revenue flows have declined, eroding debt affordability. Data released by the Central Bank shows that both domestic debt and external debt jumped by double-digit figures over the previous year in 2017. A deteriorating fiscal position led Moody’s to downgrade Kenya’s credit rating from B1 to B2 on 13 February. The agency views fiscal trends worsening in the near-term, with greater reliance on commercial external debt. However, it assigned a stable outlook, given the economy’s relatively diversified structure, strong growth potential and mature financial sector.

Kenya Economic Growth

Increased agricultural output, supported by more favorable weather conditions; an expansion in construction activity for planned infrastructure projects; and an upturn in investment should bump up growth this year. That said, the government’s interest rate cap policy will continue to dent growth. Risks to the outlook stem from the economy’s rising debt levels. Met the why particular panelists project GDP growth of 5.3% in 2018, which is unchanged from last month’s forecast, and 5.8% in 2019.

Kenya Economy Data

20122013201420152016
Population (million)11.741.843.044.245.5
GDP per capita (USD)1,2431,3221,4331,4271,558
GDP (USD bn)50.655.361.663.170.8
Economic Growth (GDP, annual variation in %)4.55.95.45.75.8
Consumption (annual variation in %)5.78.54.65.14.8
Investment (annual variation in %)12.71.214.86.7-9.3
Industrial Production (annual variation in %)4.15.45.36.16.0
Fiscal Balance (% of GDP)-6.0-6.8-7.0-9.6-8.1
Public Debt (% of GDP)42.144.545.950.453.5
Money (annual variation in %)17.213.818.612.84.8
Inflation Rate (CPI, annual variation in %, eop)3.27.26.08.06.4
Inflation Rate (CPI, annual variation in %)9.45.76.96.66.3
Policy Interest Rate (%)11.008.508.5011.5011.00
Exchange Rate (vs USD)86.0086.4590.55112.3112.5
Exchange Rate (vs USD, aop)84.5386.1387.9598.27111.5
Current Account (% of GDP)-8.4-8.1-9.8-6.8-5.2
Current Account Balance (USD bn)-4.3-4.5-6.0-4.3-3.7
Trade Balance (USD billion)-11.2-11.5-12.4-11.1-7.9
Exports (USD billion)6.15.96.15.95.7
Imports (USD billion)16.316.418.515.913.6
Exports (annual variation in %)7.0-3.62.7-3.4-2.4
Imports (annual variation in %)11.00.412.6-13.8-14.4
International Reserves (USD)5.76.67.97.57.6
External Debt (% of GDP)23.524.827.130.4-  

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Kenya Facts

ValueChangeDate
Bond Yield12.900.0 %Feb 22
Exchange Rate111.80.05 %Feb 22
Stock Market0.20.0 %Feb 22

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