UN agency tips Kenya to grow at 5.5 percent

A hawker on a Nairobi street in May 2019. PHOTO | KANYIRI WAHITO  

The United Nations trade agency sees Kenya’s economy expanding at the slowest pace in three years, in part due to structural challenges such as infrastructure gaps and struggles in diversifying and growing exports.

In its annual World Economic Situation and Prospects 2020 report, the United Nations Conference on Trade and Development (UNCTAD) projects a 5.5 percent growth in 2020, slightly slowed from estimated 5.6 percent last year.

If this comes to pass, it will be the lowest expansion in economic output since 4.9 percent in 2017 when the country underwent a bruising presidential poll contest that pushed growth to a five-year low, before rebounding to a 6.3 percent growth in 2018.

“The economic outlook in Kenya is moderately positive. GDP growth is projected at 5.5 percent in 2020 amid robust private consumption, higher credit growth, and rising public and private investment,” UNCTAD said in the report.

“In addition, rapid urbanisation and further regional integration will likely continue to open up opportunities.”


UNCTAD, however, added: “Nonetheless, Kenya needs to address structural obstacles, including infrastructure gaps, skill shortages and low export diversification.”

The growth projection is one of the lowest thus far with the Treasury seeing a rebound to 6.1 percent from last year’s estimated 5.6 percent, while World Bank Group expects a 6.0 percent expansion.

“In Kenya, growth is expected to remain solid, but soften somewhat as accommodative monetary policy does not fully offset the impact of a fiscal tightening,” the World Bank economists in Global Economic Prospects report last week.

Going by UNCTAD’s outlook, Kenya’s economy will expand at the same rate as Tanzania’s, where economic activities will be supported by “robust domestic demand and investments in infrastructure, supported by foreign investments and an expansionary fiscal stance”.

Economic activities are forecast to remain aggressive, expanding 7.5 percent this year from estimated 7.3 percent in 2019, while Uganda’s growth is projected at six percent from estimated 6.2 percent last year.

“In Ethiopia growth is forecast to exceed 7.0 percent in 2020 and 2021, driven by rising private investment, robust public investment and growing business confidence,” UNCTAD said.