The global economy is on a decline. The expected global economic growth rate in 2019 has been revised down to 2.8 per cent from 3.2 per cent. The dip is largely attributed to the US-China trade dispute.
The US, the world’s largest economy, has not been spared from the slump. Its economy is projected to grow at 2.1 per cent down from the earlier prediction of 3.2 per cent. Some economists predict that the country will move into a recession in 2020/2021.
In Europe, two of the largest economies, Germany and the UK, are also experiencing a dip in economic expansion. Uncertainties about Brexit negotiations have negatively affected the UK’s economy.
The decline in developed economies has, in turn, affected the emerging and frontier markets such as Kenya.
According to the CEO of the Nairobi Securities Exchange, Geoffrey Odundo, developments in the advanced economies have a knock-on effect in the developing markets.
Speaking to analysts and stock market participants, the CEO stated that it is important to note what is happening in the global markets because that is where we get international investors from.
Kenya’s stock market is largely dependent on foreign investors. Since the start of August, the NSE 20 share index which tracks the best performing counters at the exchange has dropped by 5 per cent indicating a slowdown in Kenya’s equity market.
