Kenya’s real GDP growth will next year trail the performance of its East Africa Community (EAC) partners except Tanzania and Burundi, new projections by the African Development Bank (AfDB) show, partly hurt by inflationary pressures.
The bank’s newly released annual Africa economic outlook report shows that Kenya’s GDP growth is projected to slow down to 5.7 percent in 2023 from 5.9 percent this year—the third-lowest within the seven-member bloc.
The outlook shows that Rwanda will retain the fastest GDP growth in 2023 at 7.9 percent, followed by South Sudan and the Democratic Republic of Congo (DRC) tied at 6.5 percent, Uganda (6.2), Kenya (5.7), Tanzania (5.6) and Burundi (4.6).
The projected GDP performance for 2023 means that Kenya will slump from the projected third position in 2022 after Rwanda and DRC this year to the fifth place—overtaken by Uganda and South Sudan.
The AfDB’s economic projections for the current 2022 financial year show that Rwanda is expected to post the strongest GDP growth within the EAC this year at 6.2percent, followed by DRC at 6.2, Kenya(5.9), South Sudan(5.3), Tanzania(5), Uganda(4.6) and Burundi at 3.6.
AfDB said inflationary pressure and the August 2022 General Election is expected to impact Kenya’s growth next year.
“Growth is projected to decelerate to 5.9 percent in 2022 and 5.5 percent in 2023, driven on the demand side by a decline in domestic and external demand caused by lower income and an increase in food and fuel import costs and on the supply side by tepid economic activity across the sectors due to cost-push factors,” the bank said of Kenya’s cases in the outlook released on the sidelines of its annual general meeting in Accra on Wednesday.
“Inflation is projected to edge up to seven percent, close to the upper end of target band of 7.5 percent, caused by greater energy and food inflation” it stated.
The bank said Kenya’s fiscal deficit –the shortfall in a government's income compared with its spending—is however projected to narrow to 6.5 percent of GDP in 2022 and 5.5 percent next year with the resumption of the IMF-supported fiscal-consolidation and debt management programme.
Kenya posted a surprise 7.5 percent GDP growth for 2021 with data by the Kenya National Bureau of Statistics showing that an estimated 926,000 new jobs were created last year, reinforcing the rebound in the country’s economic growth as transportation, accommodation, and food services.