The Central Bank of Kenya (CBK) projects the Kenyan economy to expand by 6.1 per cent in 2021 and by a further 5.6 per cent next year.
This is the reserve bank’s first economic projection for the year and comes after its recent receipt and analysis of 2020 GDP data from the Kenya National Bureau of Statistics (KNBS).
Growth in the period is largely expected to come from base effects after a 0.3 per cent GDP contraction last year as a factor of the COVID-19 pandemic.
CBK is expected to review its GDP outlook subsequently and after its receipt of quarter one, two GDP data later next in October.
CBK Governor Patrick Njoroge has based his projection on leading economic indicators alongside rebounding optimism for growth as mirrored in its market surveillance earlier this month.
“It’s clear that respondents remain quite optimistic. There is a lot of optimism in the recovery despite problems related to restriction measures and other constrains facing producers,” he said on Wednesday.
From CBK’s Market Survey, banks are more optimistic of growth in the next 12 months at 83 per cent while non-bank institutions’ level of optimism sits at 66 per cent.
Chief Executive Officers (CEOs) are meanwhile pegging their growth chances on easing restrictions even as they cite headwinds including potential changes to containment measures and increased political activity in the lead up to the 2022 general elections.
“The ease to containment measures and the global economic recovery are seen as good anchors for the Kenyan economy,” added Dr. Njoroge.
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The Hotels Survey meanwhile shows all hotels are virtually open with a few closed establishments, mostly concentrated in Nairobi and its environs.
Meanwhile, manufacturers have cited rising input prices especially on imports as an Achilles heel to growth this year.
According to leading economic indicators through to August 21, exports have risen by 11.5 per cent since January with receipts from horticulture and manufactured goods surging by 25 and 39.1 per cent respectively.
While the economy fumbled for the first time in three decades last year, the CBK has pointed to dynamism in some sectors which booked an unprecedented expansion in 2020 against the pandemic’s shock.
“Some sectors have remained quite dynamic. Agriculture is the first of this, construction is also quite buoyant while health services and ICT have also expanded,” said Dr. Patrick Njoroge.
The 2020 GDP contraction was largely driven by measures taken by government to stop the health crisis from expanding.
While the measures were seen as a handbrake to stopping COVID-19 infections dead on the tracks, the interventions inhibited growth for economies world over leading to the greatest economic shock since the 1930s great depression.