Kenya's economy to grow 6.2 per cent in 2020, central bank says

Central Bank of Kenya Governor Patrick Njoroge (PHOTO: FILE)
Kenya’s economy is forecast to grow 6.2 per cent this year, up from 5.7 per cent last year, central bank governor Patrick Njoroge said on Tuesday, as regional trade shields Kenya from the effects of a global downturn.

The bank expects recovering agriculture, medium and small businesses and robust private-sector credit growth to support that growth.

“We will end up with 6.2 per cent,” Njoroge told a news conference.

Kenya is East Africa’s richest economy and is enjoying an extended rainy season after several years of drought. The government also lifted caps on bank lending rates last year, which had inhibited loans to private business.

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Kenya’s trade with other African countries “has a stabilising effect. It offers a sense of security,” Njoroge said.

On Monday, the central bank cut the benchmark lending rate for the second meeting in a row, to 8.25 per cent from 8.50 per cent. It said the economy was operating below potential and it saw room for a more accommodative monetary policy.

The finance ministry said earlier this month economic growth probably slowed to 5.6 per cent last year, from 6.3 per cent a year earlier, compared with government’s initial estimate of about 6 per cent.

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The ministry forecasts growth of 6.1 per cent this year, rising to 7 per cent per annum in the medium term.

But concern has been growing over increasing public debt. Hundreds of mismanaged infrastructure projects have stalled and it will cost around $10 billion to revive them, the International Monetary Fund said this month.

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Central Bank of KenyaGovernor Patrick Njoroge