EA trading bloc seen boosting Kenya’s growth

Kenya’s economic growth prospects for 2010 are expected to benefit immensely from implementation of the regional common market and the recovery of the global economy, a new report says.

And in further positive news for Kenya and its East Africa partners are expected to post the highest economic rebound in Africa this year alongside North Africa, thanks to the trade benefits expected to come with the implementation of an EAC common market in July.

“Kenya’s exports are likely to benefit from the expected recovery in the world economic growth and the increase in prices for some of Kenya’s main exports recorded in early 2010. The impact of the 2009 fiscal stimulus, implemented by the government in 2009 will be felt throughout 2010,” according to an outlook by the Africa Development Bank (AfDB) and the Organisation for Economic Co-operation and Development (OECD).

The performance of the Kenyan economy in 2009 was severely affected by the effects of the global financial crisis, a prolonged drought and the 2008 post-election violence which saw investor confidence dip to one of its lowest levels.

Over 2009, the country’s economy expanded by 2.6 per cent up from a revised 1.6 per cent in 2008, supported by growth in tourism, construction and communications, and fiscal and monetary stimulus measures.

“Kenya which is already a hub for East Africa countries stands to benefit from further integration of the EAC. The plan to have a common central bank and common currency has the potential to further enhance trade within the region,” the two institutions said in their outlook released in Abidjan on Monday.

They said Kenyan businesses are well positioned to take advantage of free movement of labour and capital once the common market takes shape.

“An important characteristic of the Kenyan economy when compared with the rest of Africa is the large share of its exports which are for other East Africa countries,” the outlook said.

The report is titled: “African Economic Outlook 2010; Public Resource Mobilistion and Aid.”

East Africa is expected to post a 6.2 per cent growth this year and even clock a further 6.4 per cent growth in 2011 mainly driven by Uganda and Tanzania.

Last week Planning minister Wycliffe Oparanya said Kenya expects its economic growth to accelerate in 2010 mainly helped by the likely recovery of the global economy and as favourable weather conditions boost agriculture.

“The domestic economy is expected to continue on a recovery path in 2010 with real GDP projected to grow by a rate at between four and five per cent,” Mr Oparanya said when he launched the Economic Survey 2010.

He said the government would continue to focus on infrastructure and agriculture to sustain growth.

The authorities would also seek to cut energy costs and curb dumping of cheap imports to help the manufacturing sector, he said.