NAIROBI, The Kenyan economy is projected to grow at between 5.8 and 6.0 per cent this year, according to Standard Chartered chief economist Razia Khan, who says Kenya’s economic activity will be driven by the increased investment in infrastructure and lower oil prices.
Crude oil prices have been on a downward trend since the middle of last year, falling to less than 30 US dollars per barrel currently from the mid-June 2015 high of 115 USD per barrel.
According to Khan, this trend is good for the growth of the economy but she cautions that sustained low oil prices will not only impact Kenya’s future earnings from oil but will also negatively affect the investments that the oil and gas industry has started to experience.
Khan says inflation will relatively reduce to 6.0 per cent this year, which will enable the Central Bank to reduce its benchmark lending rate.
She says volatility of the shilling and a hike in interest rates may slow the economy. The business community is optimistic that in three months’ time, the shilling will strengthen, which, in addition with other factors, will make the business environment more favourable.
Exports are still lagging behind which has been partly blamed for Kenya’s high current account deficit.