Research by Standard Chartered paints a mixed picture of Kenya’s economy. While business sentiment in the country improved over the past month, forward-looking indicators suggest a slowdown may be on the horizon.
“Ten of 15 future expectations indicators fell compared to the month prior,” the bank said, adding that firms expect demand to decline early in 2017.
“New orders dropped to the lowest level since June 2014 and export orders fell to a series low. Firms also expected to reduce production and to employ fewer people,” the bank added.
Standard Chartered saw a similar pattern in Nigeria, where a pre-Christmas rally in business sentiment fizzled out. Expectations for the first quarter of 2017 are low, as firms report weaker output levels due to rising input prices, high lending rates and limited credit availability.
According to Citi frontier markets analyst Andrew Howell, frontier investors are actively avoiding Nigeria now, as the country remains stuck in the economic doldrums. “The erstwhile second-largest frontier market remains beset by currency weakness, capital controls and poor economic growth,” Howell noted.
By way of consolation, he did add that Citi expects Nigeria to join Lebanon,Argentina and Kuwait in emerging from recession this year, although it might be too late to restore investor interest in the country.
WSJ Weekly Frontier Update
