Standard Chartered Bank #ticker:SCBK chief economist for Africa Razia Khan has forecast a flat growth for Kenya this year compared with last year.
She sees economy expanding by 4.6 per cent in 2018 – barely unchanged from estimated 4.5 per cent last year – largely due to reduced public spending on infrastructure development and persisting credit crunch in the private sector.
There is also mounting pressure on the Treasury to further cut down on expenditure to manage rising debt in light of below-target revenue collection, Ms Khan added.
“It takes time to put government together and there isn’t necessarily going to be fiscal space for immediate resumption in… investment in big infrastructure projects. So big support to growth that you have seen in the past just isn’t there in the very near-term,” the London-based economist told a press conference in Nairobi on Wednesday.
“The other (challenge) is uncertainty around interest rate legislation. Does that get modified? Is there political willingness to look at how this has had inadvertent impact on the Kenyan economy? How it’s led to risk aversion and the tightening of the lending standards”
Ms Khan’s projection falls below a consensus of about 5.3 per cent growth outlook for Kenya.
Barclays Africa Group’s chief economist Jeff Gable and Stanbic Bank economist for East Africa Jibran Qureishi last week projected 5.6 per cent and 5.5 per cent growth, respectively.
A monthly consensus forecast by Barcelona-based FocusEconomics –an economic analysis firm which tracks growth projection from 11 global leading banks, consultancies and think-tanks – on Tuesday also put Kenya’s growth outlook at 5.3 per cent.
Treasury secretary Henry Rotich has projected a growth of between 5.5 and six per cent, while Central Bank of Kenya government Patrick Njoroge is the most bullish in his forecast at 6.2 per cent.