The world bank is projecting that Kenya’s GDP growth will recover to 5.5 percent in 2018, and steadily rise to 6.1 percent by 2020.
This is following multiple headwinds that dampened growth in 2017 that saw GDP decelerate to a 5-year low of 4.8 percent. Poor rains, slowdown in credit growth to the private sector and election-induced uncertainty weighed down on economic activity in 2017.
World bank further notes that agricultural output is expected to rebound on the back of better rains. The dissipation of political uncertainty and the recovery in the global economy is supporting a rebound in business sentiment. This should support a broad-based recovery in private investment.
However, partially mitigating the lift from the upside drivers are the rise in oil prices; down-sizing of the fiscal stimulus from earlier years; and the still weak credit growth to the private sector. Regarding the latter, the baseline however assumes that the ongoing discourse to remove the interest rate cap, in its current form, will be successful in 2018, thereby supporting a robust recovery in private sector credit growth in 2019 and beyond.
