NAIROBI: The World Bank has downgraded Kenya’s growth for this year to 5.5 per cent as the economy grapples with various headwinds.
The global lender cited the ongoing drought, weak credit growth and the rise in global oil prices as the main reasons for climbing down from its earlier forecast on Gross Domestic Product (GDP) of 5.6 per cent it made last year.
“Given headwinds from the ongoing drought, weak credit growth and the pick-up in oil prices, GDP growth is expected to decelerate to 5.5 per cent in 2017, a 0.5 percentage point mark down from earlier forecasts,” said the World Bank in its latest Kenya Economic Update.
The Bretton Woods institution’s sentiments were echoed by Genghis Capital. In its 2017 Playbook, the investment bank also projected a slower growth in 2017 due to the general election jitters, prolonged drought and the after-effects of the interest rates cap legislation.
The economy is expected to expand by between 4.75 per cent and 5.25 per cent this year with agriculture, manufacturing and transport emerging as the top three largest contributors of growth.
However, the World Bank said growth is expected to pick up in the medium-term as the rains start, tourism numbers picked up and the global economy rebounds.
“However, over the medium term, we expect these headwinds to ease and together with the projected steady strengthening of the global economy, rebound in tourism,” said the the bank.