According to the July 2018 Monetary Policy Committee’s predictions survey, the tourism and manufacturing sectors are expected to record strong growth. This is because of the Wildebeest Migration, direct flights to the US, and the return of direct flights to Nairobi by Air France. On the other hand, the Big Four agenda is expected to drive growth in the manufacturing sector.
With regards to tourism, forward hotel bookings in July 2018 were higher than July 2017. This was attributed to the wildebeest migration, political stability in the country, and favourable climate.
The survey also indicates that other sectors such as transport and trade are expected to record strong growth in 2018 as well.
Economic Growth Predictions
The survey indicates that improved agriculture due to better weather conditions, increased government spending on the Big Four agenda, growth in tourism, increased business investment, and the completion of infrastructure projects will promote economic growth this year.
However, the risks to economic growth include the new tax measures under the Finance Bill 2018, high electricity costs particularly to manufacturers, and “relatively high foreign debt levels.”
Overall, banks and non-bank respondents that gave their feedback during the survey showed a sustained optimism towards the country’s economic prospects in 2018.
The risks to this optimism include “uncertainties with regard to the interest rate capping law amendment, delays by county and central government to settle pending bills, exposure to high non-performing loans, the likely impact of some of the tax measures in the FY2018/19 on the cost of doing business, and concerns over higher external debt service.”
