Global economists have marginally cut Kenya’s growth outlook for 2022 largely on rising external debt costs and reduced investor confidence ahead of the August 9 General Elections.
A consensus outlook from 14 global banks, consultancies and think-tanks shows economic activities will likely expand 5.3 percent this year, a 10-basis point downgrade from 5.4 percent projection last month.
Analysts at Barcelona-based FocusEconomics, who compiled the March forecast data between February 15 and 20, said: “Kenya’s reliance on foreign capital for infrastructure and a rise in external debt pose downside risks to the outlook”.
The economists have backed robust public spending as well as continued spending by households and firms to sustain growth above five percent this year for the second year running after contracting 0.31 percent in 2020.
They, however, see growth slowing slightly to 5.2 percent next year as a new regime takes over from President Uhuru Kenyatta after the elections.
“Political uncertainty surrounding mooted constitutional reforms and the next elections in 2022 could also dent confidence,” analysts at Economist Intelligence Unit (EIU) wrote in their outlook report on Kenya.
The downgrade is notably on the weight of US-owned Moody’s Analytics whose economists have slashed Kenya’s growth outlook sharpest to 6.2 percent this month from 8.6 percent earlier, while American investment bank Goldman Sachs has upgraded growth to 5.3 percent from 5.2 percent last month.
The other institutions have largely retained their forecast on Kenya. They are UK’s Capital Economics (6.5 percent), US’s JPMorgan (6.3 percent), Switzerland-based Julius Baer (5.5 percent), London-headquartered Euromonitor International (5.3 percent) and New York-based brokerage house Citigroup Global Markets (5.1 percent).
Others are UK’s HSBC (5.0 percent), Fitch Solutions (5.0 percent) and Fitch Ratings (5.0 percent), and Standard Chartered (4.8 percent).