The Kenyan economy has shown resilient growth this year to remain one of the fastest-growing in the world but experts here say 2017 is expected to be a critical year for the local economy with elections due in August, sluggish global economic growth and the full impact of Brexit.
The Kenyan economy is projected to grow at a 6.0 per cent pace compared with 3.0 per cent and 2.5 per cent growth for Africa and the world economy respectively.
After growing at a rate of 5.0 per cent per annum in the last four years, the Kenyan economy is now gearing for what is being billed as one of the most competitive elections in the history of the nation.
Political noise is expected to slow Foreign Direct Investment (FDI) inflows as most investors enter into a wait-and-see mode. The economy has been a global star performer recently as it outpaced many other economies in the world.
At a projected growth rate of 6.5 per cent the Kenyan economy is expected be to one of the fastest growing in the world. But economic experts agree on one thing, the road ahead is tough.
The World Bank has forecast that Kenya’s economy will grow by 6.0 per cent in 2017 and 6.1 per cent in 2018. The Bank says public investment, an easy monetary policy and closer integration in the East African Community will support Kenya’s economy in 2017.
In 2016, the banking sector experienced what would perhaps be one of the biggest shake ups in the industry after President Uhuru Kenyatta signed into law the Banking Amendment Act which caps the bank’s lending rate rates at four percentage points above the benchmark Central Bank Rate (CBR).
This forced commercial banks, amid protests and uncertainty, to reduce their interest rates from an average of 20 per cent to 14.5 pe rcent in line with the new law.
According to the World Bank, the capping of lending rates for commercial banks could also pose a risk to economic growth.
The National Treasury forecasts Kenya’s economy will grow 6.0 per cent in 2017 and by 7.0 per cent a year in the medium term before accelerating to 10 per cent by the year 2020.
The International Monetary Fund says Kenya needs to embark on fiscal consolidation while increasing her tax base to arrest a yawning budget deficit.
Source: NAM NEWS NETWORK