Kenya trims 2015 growth outlook on high interest rates, El Nino

Kenya’s finance minister further trimmed the country’s 2015 economic growth forecast on Wednesday, citing tighter monetary policy and the potential impact of the El Nino weather phenomenon that has brought heavy rains.

Henry Rotich said growth would be in the range of 5.8 to 6.0 per cent. The government already downgraded its forecast to 6 per cent in October from the 6.5 to 7 percent it originally predicted.

Treasury, World Bank downgrade Kenya growth outlook

While still on track to outpace the 5.3 per cent growth it recorded in 2014, Kenya’s economy has this year been buffeted by global and domestic factors.

Reviewing spending

A strong dollar and worries about a hefty current account deficit have weighed on the shilling, prompting the central bank to hike interest rates.

Rotich told a briefing he was reviewing spending in fiscal 20152016, which ends in July, and that government borrowing could be lower than expected. He did not give figures.

The budget deficit for 201516 has been forecast at 8.7 per cent of gross domestic product, higher than 201415 and a level that has worried economists who say Kenya should be reducing the gap as the economy recovers from a sluggish period.