The International Monetary Fund (IMF) has revised downwards the projection of Kenya’s economic growth this year to 5.6 per cent, reflecting a tough environment for most sectors.
In its World Economic Outlook in April, the Washington-based institution had forecast the country’s economic growth at 5.8 per cent compared to 6.3 per cent in 2018.
IMF joins other institutions, such as the World Bank and Treasury, which have all lowered the country’s economic outlook.
The 6.3 per cent growth last year was the highest in over five years as Kenya recovered from a period of electioneering and drought.
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IMF expects the economy to grow faster in 2020 by six per cent, as the agricultural sector, the mainstay of the country’s economy, recovers from the effects of poor rains.
Already, in the first two quarters of the year, total national output dropped compared to last year as the agricultural sector performed poorly following bad weather.
In the first three months of 2019, the economy expanded by 5.6 per cent compared to 6.5 per cent in the corresponding quarter of 2018, with the service industries such as wholesale and retail trade, transportation, accommodation and food services, financial and insurance activities compensating for a sluggish agricultural and manufacturing sector.
In the second quarter, the economy expanded by 5.6 per cent, which was lower than 6.4 per cent registered during the same quarter in 2018.
“A number of sectors posted impressive performances but the overall growth was curtailed mostly by a slowdown in activities of agriculture, manufacturing, and transportation,” said the Kenya National Bureau of Statistics in its half-year GDP report.
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The Government statistician noted that other macro-economic factors such as inflation, exchange rate, and interest rate remained largely conducive for growth.
Kenya’s economy is also expected to take a hit from a slowing world economy, with the IMF forecasting a three per cent growth for the 2019 global GDP.
This will be the global economy’s lowest level since 2008–09 and a 0.3 percentage point downgrade from IMF’s April 2019 World Economic Outlook.
In September, Kenya’s National Treasury said the economy was expected to grow by six per cent this year.