CBK: Election, inflation won’t hamper 5.4pc growth projection

Central Bank of Kenya Governor Patrick Njoroge. PHOTO | SALATON NJAU | NMG

The Central Bank of Kenya sees the economy expanding 5.4 percent this year despite elevated inflationary pressures which have soared to a five-year high.

CBK Governor Patrick Njoroge expects inflation, which hit a 61-month high of 8.3 percent in July, to ease in near-term on moderating international prices of oil, wheat and edible oil as well as maize flour and fuel subsidies.

The CBK boss does not expect private sector investment to slow down significantly despite the upcoming high-stakes presidential poll, arguing confidence in the economic prospects amongst business leaders are higher than previous election year in 2017.

“Leading economic indicators point to continued good performance even against the uncertainties related to the political calendar. Taken together and looking at various indicators, the economy is expected to remain resilient in 2022 at 5.4 percent,” Dr Njoroge said last Thursday.

“5.4 percent growth is a pretty solid growth in 2022 compared with other economies given the external shocks that we are still navigating through and our own internal shocks that we have to contain.”

The fresh economic growth outlook is, however, a downgrade from 5.9 percent forecast at the beginning of the year.

The growth will largely be supported by activities in manufacturing, wholesale and retail, hotel and accommodation as well as transport and storage sectors, according to financial services sector regulator.

Findings of a market perception survey — conducted by the CBK every two months— suggested in July that 79 percent of business leaders in the banking industry were upbeat in economic prospects in next 12 months compared with 26 percent in 2017.

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