The rapid rise of oil prices in the first half of 2011, and the Euro crisis in the second half of the year, as well as the drought in the Horn of Africa, triggered the depreciation of the shilling. Recovery has since been slow.
According World Bank latest report, 2012 will not be an easy period for the economy.
However, any meaningful gains, it says, will depend on whether the government is able to effectively manage the current crisis, maintain political stability in the run-up to the elections, and address the security challenges arising from the conflict with Somalia.
"The pace of current growth is still well below the target of Vision 2030 of 10 per cent necessary to draw more Kenyans into employment and reduce poverty," said Githae.
Recent budgets have been geared towards supporting growth to mitigate the adverse effects of domestic and external shocks.
Accelerating growth further, he reckons, requires stepping up both public and private investment to raise Kenyaâs economic competitiveness and create more employment opportunities.
The Government has taken various policy actions to rein in on inflation. A combination of tight monetary policy and fiscal restraint as well as easing food and oil prices and firming up of the shilling has worked to support easing of inflation.
Elections are prone to uncertainty because they have often resulted in violence and new policy regimes.
According to the World Bank report, the current economic circumstances are more challenging than in 2007. The Government will need to control public spending in light of inflation pressures and public debt burden.
"Although the government has committed to reducing expenditures, it will face spending pressures related to the devolution process, and to organising and financing the 2012 elections.
The 2012 elections will not only usher in a new national government, but also a new system of devolved government," indicates the report.