Kenyan economy set for growth in two years, Deloitte report

Kenya’s economy may improve in the next two years, according to a recent survey by audit firm Deloitte.

The study, dubbed Kenya Economic Outlook 2016: The Story Behind the Numbers, gives an overview of how the economy is likely to perform after the August 8 elections.

Kenya has not been spared the turbulence the global economy has suffered in recent times.

Kenyans have complained about the rising cost of basic commodities and high unemployment rate.

However, in the coming years, Kenya’s GDP is expected to rise due increased private and consumer spending.

Deloitte's study quotes Business Monitor Intelligence Research, which states that the country's GDP will rise to 6.4 per cent in 2018 and maintain it in the region of 6 per cent by 2020.

This has been tied to increase in income and private expenditure, which is set to rise from Sh4.7 trillion to Sh8.7 trillion in 2020.

The spread of mobile money transfer services has also been cited as one of the main drivers of the projected growth.

According to Deloitte, the Economic Intelligence Unit (EIU) predicts a fall in the level of inflation from 5.6 per cent in 2016 to 5.1 per cent in the current year and all the way to 2020. The anticipated fall has been attributed to the gains that are expected to be made due to the monetary policies and regulations put in place by the Central Bank.

“The EIU notes that drought remains a potential risk to inflation and demand pressures will prevent a rapid decline in inflation,” notes the study.

But it may not be all rosy given that the exchange and interest rates may not be favourable, according to the study.

According to the EIU, the Kenyan shilling has been able to withstand tough economic times but the negative twist of events in the US economy may bring adverse effects.

“The Kenyan shilling will weaken from an average of 104.23 against the US dollar in 2016 to an average of 117.5 in 2020,”?the EIU notes.

In most cases, Kenya's economic growth usually suffers in the run-up to elections as investors withdraw, fearing losses due to poll violence.

The government has assured investors that it will ensure the safety of their investments.