The East African region is set to experience a slowdown in economic growth in 2020, given the restrictive measures governments have imposed to limit the spread of covid19 and the global economic slowdown.
The International Monetary Fund predicts that the Ethiopian, Rwandan and Ugandan economies will expand by 3-3.5% in 2020, a downward revision from earlier projections. Tanzania’s economy is expected to expand at 2% and Kenya’s economy is projected to grow by only 1% in the current year.
In 2020, Kenya is expected to suffer the biggest hit in economic expansion in the East African region due to its strong links to the international markets. A report by Citi Research states that the Mombasa port is an important entry point for international trade in the region. The Kenya Ports Authority recorded lower than expected cargo movement at the port in the fast quarter of 2020, a factor that is likely to negatively affect Kenya’s economic growth in the current year.
The projected drop in global remittances is also expected to dampen Kenya’s economic growth. The country receives the larges share of diaspora remittances in the region.
Although the IMF expects a growth rate of only 1% in East Africa’s top economy in 2020, analysts at Citi Research are a bit optimistic in their forecast of 2.9% economic growth. The researchers believe that the informal sector and agriculture will support this growth.
According to Citi Research team, Q1 economic data will be normal for most countries. Q2 data is expected to be depressing in most economies, while Q3 data will be “problematic everywhere”. The analysts expect economic activity to pick up in the last quarter of 2020.
The IMF and Citi predict that East African economies will post strong economic growth in 2021. The prediction is based on the low number of confirmed COVID-19 cases and deaths in the region, compared to the numbers recorded in some Asian and European countries.
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