IMF predicts 5.3pc growth on poll jitters and drought

President Uhuru Kenyatta. PHOTO | SALATON NJAU | NMG
President Uhuru Kenyatta. PHOTO | SALATON NJAU | NMG 

The International Monetary Fund (IMF) has forecast slower growth this year citing effects of drought, sluggish private sector credit growth and August General Election jitters.

The IMF expects the economy to expand by 5.3 per cent compared to 5.8 per cent last year.

The main risks facing the economy were the adverse weather and changes to the banking law last year, which capped commercial lending rates at four percentage points above the Central Bank Rate.

Growth prospects have also been dimmed by uncertainties related to the next General Election in which President Uhuru Kenyatta is seeking a second term while Opposition leader Raila Odinga has built an alliance to challenge him in August 8 poll.

In its latest report on the sub-Saharan Africa economy, the IMF said growth would pick up after this year, driven by the expected normalisation of rainfall, a firmer global economy, a rebound in tourism and the resolution of challenges curbing credit growth.

It forecast 5.8 per cent growth in 2018.

“Drought would dent the growth momentum somewhat,” said the IMF.

“Upcoming elections in Angola and Kenya will make it difficult for these countries to address weakness in their underlying fundamentals.”