Treasury growth forecast of 5pc slowest in five years

Treasury secretary Henry Rotich. FILE PHOTO | NMG
Treasury secretary Henry Rotich. FILE PHOTO | NMG 

The Treasury has further lowered its 2017 economic growth forecast to five per cent due to political uncertainty, making it the slowest in five years.

Treasury secretary Henry Rotich said political jitters will shave at least a percentage point of the projected growth in national wealth this year. 

This is the second time in weeks that the Treasury has downgraded this year’s growth outlook, having slashed it by a half percentage point in mid-September to 5.5 per cent, citing drought and political uncertainty.

The drought earlier this year hurt agriculture, which accounts for 30 per cent of output and employs majority of Kenyans.

“2017 has been a difficult year because of time we have spent on electioneering to the point businesses have been put on mode of wait-and-see,” Mr Rotich said in Elgeyo Marakwet.

“We had set ourselves to grow at six per cent, but this prolonged electioneering period has cost us about one percentage point of our GDP, and that has also affected our revenue collection.”

The revenue collection for between July and mid-September was behind target by Sh29 billion, the Treasury said earlier, adding some investors were delaying decisions after the Supreme Court nullified the results of August  8 presidential election.

Opposition leader Raila Odinga withdrew from Thursday’s repeat poll on grounds that the electoral agency failed to institute reforms for a free and fair vote.

Mr Odinga asked his supporters to boycott the presidential election, saying he would lead a campaign of civil disobedience.

The standoff between the opposition and Jubilee has frightened investors and is slowing growth.

Business people, especially those operating retail shops, say consumers are hoarding money during the turbulent election period.

Monthly sales for business have been falling since June, says a monthly output report developed by Stanbic Bank.

Foreign investors withdrew Sh13.82 billion worth of investments from the Nairobi bourse and pumped in Sh2.48 billion in nine months through September, resulting in net foreign cash outflows of Sh11.35 billion.

This was the highest net outflow in similar period since 2011 they stood at nearly Sh1.47 billion, the Capital Markets Authority data showed earlier in the week.