Kenya's economic growth will be above regional average, World Bank says

Kenya is set to be among the fastest growing economies in Africa, although its projected growth rate of 5.7 per cent is still below east African neighbours Tanzania and Ethiopia, the World Bank has said.

According to its latest Global Economic Prospects report released Wednesday, the financial institution predicts that Kenya will again be among the top dozen performers in Africa in growth terms, adding the rates will increase to 6.1 per cent in both 2017 and 2018.

Kenya's economic expansion will be above that of Uganda (5 per cent) but below Tanzania (7.2), Rwanda (7.6) and Ethiopia - which is projected to register a staggering 10.2 per cent - but still well above average growth rates in Africa and other emerging economies.

"Despite pressure on the shilling, Kenya is expected to grow at a robust pace, supported by large-scale infrastructure projects, including the expansion of the railway system, which should help boost domestic trade, and a new port," the report says.

READ: Construction and agriculture power GDP growth to 5.8pc

The Bretton Woods institution says that sub-Saharan Africa as a whole is expected to grow by 4.2 per cent in 2016, up from 3.4 per cent in 2015, with this projection, however, based on the assumption that commodity prices will stabilise and electricity constraints will ease this year.

Economic activity will vary across Sub-Saharan Africa this year "with consumption growth remaining weak in oil exporting countries as fuel costs rise, while lower inflation in oil importing countries helps boost consumer spending."

South Africa has one of the weakest levels of growth at 1.4 per cent, up by just 0.1 per cent from the previous year.

The report says that weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to 2.9 per cent, up slightly from 2.4 per cent growth in 2015.

“Simultaneous weakness in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity because those countries have been powerful contributors to global growth for the past decade,” the report states.

Moreover, a lack of growth in developing countries “poses a threat to hard-won gains in raising people out of poverty,” the report warns.

“More than 40 per cent of the world’s poor live in the developing countries where growth slowed in 2015,” said World Bank Group President Jim Yong Kim.

"Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies."

Global economic growth was less than expected in 2015, when falling commodity prices, declining international trade and capital flows, and episodes of financial volatility sapped economic activity.

Firmer growth ahead will depend on continued momentum in high income countries, the stabilization of commodity prices, and China’s gradual transition towards a more consumption and services-based growth model, the report says.