Kenya's economy projected to grow by 5.5 per cent in 2023

Parliament chambers as seen when Treasury CS Njuguna Ndungu read the Budget Highlights for FY 2023/24 . [Elvis Ogina, Standard]

Kenya's economic growth rate slowed down to 4.8 per cent in 2022, compared to 7.6 per cent in 2021, Treasury Cabinet Secretary Njuguna Ndung'u now says.

During the budget estimates presentation at Parliament in Nairobi on Thursday, June 15, 2023, Prof Ndung'u attributed the decline to suppressed agricultural production, which was impacted by adverse weather conditions.

"The adverse weather conditions experienced during the year had a significant impact on the agricultural sector, leading to decreased productivity and ultimately affecting the overall economic growth. This setback has caused concerns among policymakers and economists who had hoped for a continuation of the strong growth momentum seen in the previous year," he explained.

Ndung'u emphasised the importance of addressing the challenges faced by the agricultural sector in order to safeguard future economic growth.

"Efforts to mitigate the effects of adverse weather conditions and promote a more resilient agricultural industry will be crucial for sustaining and revitalizing the country's overall economic performance," he noted.

"While the slowdown in economic growth for 2022 is a cause for concern, it underscores the need for strategic measures and investments to mitigate the impact of adverse weather conditions on vital sectors such as agriculture. By implementing appropriate policies and interventions, the government can foster a more resilient economy capable of withstanding such challenges in the future," he added.

The growth in 2022 was primarily supported by the services sector, particularly transport and storage, financial and insurance, information and communication, and accommodation and food services.

He exuded confidence that the economy is expected to rebound and expand by 5.5 percent in 2023, driven by broad-based private sector growth, including the continued strong performance of the services sector, recoveries in agriculture, and ongoing public sector investments.

Despite the inflation rate remaining above the 7.5 per cent upper target since June 2022, the macroeconomic environment remains generally stable.

The tight monetary policy stance, along with expected improved agricultural production, is projected to drive inflation towards the 5 percent target.

He said the growth outlook over the medium term will be strengthened by the implementation of the strategic priorities under the Government's Bottom-Up Economic Transformation Agenda (BETA).

The fiscal policy aims to undertake a growth-friendly fiscal consolidation to preserve debt sustainability.

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