Stanbic Bank of of Kenya’s leading commercial banks, has revised down its economic growth projection for he country to 5.4 per cent from its previous forecast of 5.8 per cent.

The bank attributes the slower growth projection to the poor rainfall received in the last quarter of last year and early 2017 which has negatively impacted the agriculture sector and weighed down on credit growth.

The government has projected the economy to grow 5.9 per cent this year, slower than the earlier projected 6.0 per cent because of the effects of this year’s general election, due in August, global economic uncertainties and the cap on interest rates.

The government’s projection is higher than what private sector economists are forecasting.

Cytonn Investments projects a growth rate of 5.4 to 5.7 per cent while Stanbic Bank pegs this year’s GDP growth at 5.4 per cent, driven by large public investment in infrastructure, including the Standard Gauge Railway and irrigation.

Stanbic Bank cautions against increased public sector borrowing which it says may be unsustainable, considering that return on investment in infrastructure is long term.

The bank projects that the electioneering period will not have an adverse effect on the economy, but calls for a cooling down of political temperatures.

The rate of inflation in the first half of the year is expected to increase on account of poor rains experienced in recent months. Underpinning this is also the introduction of the law capping interest rates which has seen a slump in private sector credit growth.

The economists do not expect a major increase in the price of fuel despite the deal by oil exporting countries to reduce supplies