Nairobi – Kenya’s government cut its 2017 economic growth forecast on Friday to 5.5 per cent from an initial 5.9 per cent, a senior Treasury official said.
Kamau Thugge, the Treasury principal secretary, said growth would then rise to 6.5 per cent per year in the medium term.
“This is contingent on having good weather,” he told a meeting convened to discuss budget preparation.
Thugge later told Reuters this year’s forecast was reduced due to a severe drought in the first half of
Prolonged politicking associated with an inconclusive Kenya’s presidential election is expected to slow down economic growth to below five per cent this year, making it the lowest rate of expansion since 2012, economists says.
The outlook is hinged on the expected slowdown in public investment that has been a key driver of growth in recent years, in the wake of a slump in private sector activity that began three years ago.
Economists at Stanbic Bank have become the latest to downgrade Kenya’s growth projection to 4.8 per cent from 5.2 per cent previously, citing a slowdown in public investment in infrastructure development and a drop in private sector activity for the fourth straight month in August.
Citi Research Economics has also cited prolonged political uncertainty as reason for their decision to slash its growth forecast to below five per cent from 5.2 per cent in the run up to the August 8 polls and 5.8 per cent earlier in the year.
The new outlook is also largely based on the slowdown in agriculture, construction and tourism sectors, and a decline in private sector credit growth to 2.1 per cent in May from over 17 per cent in December 2017.