Kenya’s economic growth rate as measured by the Gross Domestic Product (GDP) is expected to rebound to 5.3% in 2021.
Estimates from National Treasury indicate that GDP will slow down to 2.6% this year due to the adverse effects of COVID-19 pandemic. Dr Julius Muia, Treasury Principal Secretary said that Q2 economic indicators are already showing strong performance in agriculture due to favourable weather and lifting of lockdowns in key export markets.
The manufacturing sector is also showing strong recovery. “This is reflected by improved performance in cement production, total electricity generation, and agro-processing,” said Dr Muia.
The ICT sector, which has been critical in supporting the economy is expected to report improved performance. This is on account of increased digital communication.
There has been a notable improvement in the construction industry with cement consumption in May 2020 and June 2020 rising compared to April 2020.
The transport and storage, accommodation and restaurant sectors were severely affected by the movement restrictions and curfew that begun in March and lasted for more than 100 days. But these sectors are expected to improve as a result of removal of border restrictions and the commencement of local and international flights.
The 2021/21-2023/24 medium-term budget is set against outbreak and the rapid spread of the COVID-19 pandemic.
While virus containment measures have disrupted livelihoods, Dr Muia said there has been severe crippling of businesses and reduction in government revenue.
He said the Government is already finalizing the development of a Post COVID-19 Economic Recovery Strategy.
Treasury projects that tax revenue will contract by 3.2% in the 2020/21 financial year due to the negative effects of the COVID-19 pandemic on businesses and the tax incentives introduced to cushion Kenyans and businesses from the impact of COVID-19.
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