Kenya is the only economy in East Africa whose projected economic growth for 2023 has been revised upwards by the International Monetary Fund (IMF) in its latest review, giving Nairobi a major confidence boost as it fights an economic crisis.
In the just-released World Economic Outlook, IMF now projects that Kenya will grow at a rate of 5.3 percent in 2023 from 5.1 percent forecasted in October 2022.
The IMF has revised projections for Rwanda, Uganda, Burundi and the Democratic Republic of Congo (DRC) downwards.
Burundi’s projected growth for 2023 has suffered the largest slash of 80 basis points to 3.3 percent followed by Rwanda’s whose projected growth has been downgraded by 50 basis points to 6.2 percent.
The fund has also downgraded the projected growth for DRC and Uganda by 40 basis points and 20 basis, respectively, to 6.3 percent and 5.7 percent. Tanzania is the only economy in East Africa whose growth projection for 2023 remains unchanged, at 5.2 percent, in the two forecasts.
This upward revision of projected growth from 5.1 percent to 5.3 percent implies that Kenya is poised to generate Sh25.5 billion more in economic output in 2023 than had been earlier projected by the IMF.
The fund also expects Kenya's economy to grow faster than had been earlier projected with the fund projecting moderate acceleration in the economy’s growth momentum to 5.4 percent in 2024.
The pervasive downward revision of growth projections in East Africa comes at a time when the region is grappling with a multiplicity of shocks including drought and spill-overs from the war between Russia and Ukraine.
In its latest forecast, IMF has also painted a grim picture as far as the cost of living in East Africa is concerned. The fund now projects Kenya’s inflation rate to average 7.8 percent in 2023 a revision from the softer 6.6 percent that had been projected in October 2022.
This means that IMF expects Kenya’s average inflation rate for 2023 to stand above the Central Bank of Kenya’s prescribed ceiling of 7.5 percent.
The largest review of the projected cost of living in East Africa has been reported in Burundi where average inflation is now expected to stand at 16 percent in 2023 compared to the earlier forecast of 8.5 percent.
Uganda’s projected inflation for 2023 has been revised from the October 2022 forecast of 6.4 per cent to 7.6 percent whilst that for DRC has been revised from 9.8 percent to 10.8 percent.
