Treasury upbeat on strong growth in 2014 aided by improved macro-economic environment
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The economy is likely to expand 5.8 per cent this year, recovering from a below-target growth of 5.1 per cent last year buoyed by agriculture, investment in infrastructure and social sector, structural reforms and expansion of the regional market, the ministry said.
The Treasury is optimistic of an economic rebound in 2014, supported by a stable macro-economic environment.
The economy is likely to expand 5.8 per cent this year, recovering from a below-target growth of 5.1 per cent last year buoyed by agriculture, investment in infrastructure and social sector, structural reforms and expansion of the regional market, the ministry said.
“Growth is expected to pick up gradually across most sectors,” the ministry said in a presentation titled: Kenya State of Economy and Budget Framework 2014, while projecting a seven per cent growth in 2017.
The Treasury said in November that it expected the economy to grow 5.6 per cent in 2013 — higher than the World Bank’s latest outlook for growth of 5.1 per cent this year.
A raft of risks
Despite the Treasury’s projections, the economy still faces a raft of risks such as weak growth in the main global economies such as China, which could affect exports and tourism, as well as public spending pressures such as public sector wages and interest rate payments.
China’s economy slowed to 7.7 per cent in the fourth quarter of 2013, a slow down some analysts say may deepen this year as the country endures the short-term pain of revamping its growth model for the long-term good.
Full-year growth in 2013 was 7.7 per cent; steady from 2012 and just slightly above market expectations of a 7.6 per cent expansion, which could have been the slowest since 1999.
Budget deficit
The Treasury said the budget deficit in the fiscal year starting in July is likely to be 5.9 per cent of GDP, down from 7.9 per cent targeted in the current year to the end of June; while spending in the 2014/2015 fiscal year is projected at Sh1.52 trillion — an equivalent of 32.9 per cent of GDP — compared to an earlier projection of Sh1.47 trillion.
The government expects revenue collection in the next fiscal year to reach Sh1.17 trillion, or 25.3 per cent of GDP.
The Treasury expects the Central Bank of Kenya (CBK) to slash annual inflation to about five per cent and retain it there.
