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Economic revival seen in 2010 as agriculture picks up
Police charge at suspected Mungiki followers. Key challenges to improving the investment climate include insecurity, corruption, and poor infrastructure, says new report. Photo/FILE
Economic growth is expected to pick up considerably next year to a high of 3.9 per cent on the back of improvements in the agriculture and tourism sectors.
Headline inflation is expected to average 16 per cent this year, but this will ease substantially to nine per cent next year.
It was an average of 27 per cent in 2008 and has eased to about 18 per cent currently.
According to the Kenya Institute of Public Policy Research and Analysis (KIPPRA), the recovery of the economy and reduction in inflation levels is dependent on risks relating to the global financial crisis, political stability, weather and implementation of reforms.
In recent months, the global crisis has eased while it has rained in most parts of the country.
However, critics have deplored the slow implementation of reforms.
“In the medium term, overall inflation rate is expected to ease. International oil prices are expected to stabilise and, locally, effective implementation of the government reform agenda coupled with prudent fiscal and monetary policy should help ease inflation,” said Kenya Economic Report 2009 released by KIPPRA on Wednesday.
The organisation’s executive director Moses Ikiara said that it would take at least of couple of years before the economy could reach the growth momentum of 2007 when the gross domestic product (GDP) reached 7.1 per cent.
Dr Ikiara, however, said that poverty remained a major obstacle to development in Kenya as the number of poor people had risen over the past decade by four million to 17 million.
The proportion of the poor to the total population had fallen to about 46 from 56 per cent in 1999.
Indeed, despite growth in 2003 to 2007 the report cautions against complacency noting that it was only in 2006 and 2007 that the country returned to the levels of per capita income above those of 1997.
“We have done poorly in tackling poverty. Therefore we need more development than recurrent expenditure in the annual budget,” said Planning and National Development minister Wycliffe Oparanya while launching the report at the Kenya School of Monetary Studies in Nairobi.
It was the first report that critically analyses economic data both locally and globally in relation to Kenya.
It will henceforth be released annually.
The report said that analysis of the recent growth in GDP showed that it was largely out of local demand for Kenyan products, even though there has been some increase in external demand.
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