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Trump, ongoing drought and August polls forces Central bank to readjust Kenya's economic growth

CBK governor reveals that Trump's policy 'America first' is likely to hurt the country's economy.

 

The Central Bank has adjusted Kenya's anticipated economic growth of 2017 by two points.

CBK downgraded the country’s economic growth forecast from 5.9 per cent early anticipated to 5.7 per cent, citing uncertainties in the global economy amid a ravaging drought.

Agriculture, which is the main backbone of the economy, is expected to perform below bar this year as a result of food producing regions having been severely affected by the ongoing drought.

CBK governor, Patrick Njoroge says it also remains unclear how the economy will react after Britain starts the process to leave the European Union following June 23 referendum vote popularly known as Brexit.

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Britain is one of the biggest importers of kenya's  horticultural products.

The Trump factor may also pose as an impediment to growth due the uncertainties over the direction of US policy toward Africa.

Economic uncertainty normally creates volatility in the global markets which makes investors hold making key decisions such as investing in a country.

Trumps’s America first policy is expected to especially hurt emerging markets like Kenya.

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“If protectionist policies are put in place, first it will hurt the US, it will also hurt emerging markets and everyone else in the globe” Njoroge said as quoted by a local daily.

However, the forecast did not indicate whether the economy will be affected by the general election despite economists warning so.

“There are increased uncertainties with regard to the prevailing drought conditions and risks in the global markets,” the governor added

General election have always affected Kenya’s economy growth since due to uncertainty it brings, farmers generally  adopt a wait and see altitude before engaging in their productive work for fear of losses as a result the annual output takes a hit.

Tourists also tend to avoid visiting the country during elections period for fear of post-elections violence breaking out, denying the country much needed foreign currencies.

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The Kenya Private Sector Alliance (KEPSA) for instance organized a summit last year in Mombasa bringing together politicians and other stakeholders to discuss ways of conducting peaceful elections come next year.

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Email: news@pulselive.co.ke

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