Economic Review: Kenya's economy is out of balance

By NJIRAINI MUCHIRA

Review: Kenya’s economy has been out of balance for a long time but in 2011 a number of external shocks exposed Kenya’s unsustainable external position. 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, experienced their own economic pressures. Finally, increasing international prices for fuel and food created inflationary pressures domestically, while also increasing the cost of the import bill. The resulting imbalances were reflected in a widening current account deficit, and a depreciating shilling.