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Economy World Bank forecasts Kenya's economy to grow to 5.5pc from current 4.9pc in 2018

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The World Bank economy forecast falls far below what the Central Bank of Kenya has predicted.

play KICC Building. (Pulselive)

Kenya’s economy is set to grow by 0.6 per cent to 5.5 per cent this year, according to World Bank.

In a newly released report, the World Bank says increased private consumption and a normalisation of the weather are expected to lift Kenya’s economic growth to 5.5 per cent from current 4.9 per cent this year.

“Economic activity is poised to rebound over the medium term. GDP growth is projected to recover to 5.5 per cent in 2018, and steadily rise to 6.1 per cent by 2020 when output gaps in the economy would have closed,” the bank says in the latest edition of its six-month publication, the Kenya Economic Update.

play World Bank (tribune)

 

A number of factors including dissipation of political tension after President Uhuru Kenyatta and opposition chief, Raila Odinga 'shook hands' and the strengthening of the global economy are also expected to work in Kenya’s favour, according to the report.

Similarly the scrapping of the capping of interest rates after two years of negative growth is also expected to spur economic growth by making it easy for small and medium-sized enterprises to access credit.

The World Bank economy forecast falls far below what the Central Bank of Kenya has predicted.

play A Kenyan tea picker. (kbc)

Also read: KENYA'S ECONOMIC PROSPECTS IN 2018 LOOKS BLEAK

On January, during Monetary Policy committee (MPC) meeting to review the outcomes of its policy decisions and recent economic development, CBK governor, Patrick Njoroge forecasted the country’s economy would speed up to 6.2 per cent in 2018, mainly powered by business friendly policies.

If we have favourable policies, we will have a stronger outcome for the economy”

High public debt, tension between the national governments and the county’s government and good relations between Kenya and its neighbors in East Africa may slow down Kenya’s economic growth.

play Central Bank of kenya (kbc)

 

The country is also expected to roll out a number of fiscal policies in June as per the International Monetary Fund loan directive which may have an effect on the economic growth but it is not yet clear.

Kenya wrote to IMF early this year requesting an  a 6 month extension of $1.5 billion standby credit and the institution accented to the request on condition the country implement a number of measures including scrapping of interest rates and reducing public debt

The World Bank forecasted Kenya’s economic growth could hit 6.1 per cent by 2020.