A survey conducted in January has projected strong economic growth for 2017. The economy is expected to grow by 5.7 percent this year.
According to the survey conducted by the Central Bank of Kenya’s (CBK) Monetary Policy Committee (MP), the economy is expected to grow by 5.7%.
This positive economic growth will be supported by continued public investment in infrastructure, recovery of tourism sector, and relatively low oil prices.
Despite the positive economic outlook, food inflation will remain elevated and prices of food commodities like maize flour, tomatoes, sugar, cabbages, Kales (Sukuma wiki) will be high due to prevailing dry condition.
Addressing the press today at his office, CBK Governor Dr. Patrick Njoroge said the prices will come down if the long rains beginning March yields a bumper harvest. The government has been distributing relief food to starving Kenyans in areas like Turkana and Kilifi.
Njoroge said Kenya’s economy is expected to remain resilient this year with increased uncertainties with regard to global growth, future US policies under President Donald Trump and outcome of Brexit negotiations.
He said the resilience of the economy and international confidence in the country’s macroeconomic policies were underscored by the International Monetary Fund’s (IMF) successful completion of the first review of Kenya’s economic programme last week.
The global market is jittery due to lack of clarity on whether UK will exit the European Union after last year’s referendum which Britons voted overwhelmingly in favour of leaving the economic bloc.
The same situation is prevailing after the election of President Trump, who has threatened to initiate far reaching reforms, including repatriating immigrants, an action which has potential to cut down on foreign remittances.
Njoroge said the uncertainties are cushioned by CBK’s foreign exchange reserves which currently stands at USD 6,936 million – Ksh 693,600 million (4.5 months of import cover).
Today’s press briefing by Njoroge comes a day after the MPC, which he chairs, met and reviewed the outcome of its previous policy decisions and recent economic developments.
According to the MPC, the banking sector recorded notable growth last year with an expanded asset base, increased capitalization, and improved profitability while private sector growth stabilized at 4.3 percent in December riven by lending to trade, real estate, private households and consumer deliverables.
The Committee retained the Central Bank Rate (CBR) at 10 percent in order to anchor inflation expectations as it noted increased uncertainties due to prevailing drought conditions and risk in global markets.
The MPC observed that the performance of the economy in the third quarter of last year was robust and was supported by macroeconomic stability, public investment in infrastructure, lower energy prices, and the recovery of the tourism sector.