Kenya’s economy is likely to expand by 5.6 per cent in 2018 from an estimated 4.8 per cent last year, economists at Stanbic Bank #ticker:CFC projected on Thursday, citing largely improved agricultural production and recovery in services sector for the upgrade.
Resumption in government expenditure on infrastructure development and continued recovery in tourism sector will also support growth, Stanbic’s economist for East Africa Jibran Qureishi said Thursday.
The economy is thought to have expanded at the slowest pace last year since 2012 (when it grew at 4.6 per cent) due to a biting drought that hit hard farming activities, prolonged electioneering that delayed investment decisions and a drop in credit growth to the private sector.
“We need to support small scale farmers and invest heavily in irrigation. We shouldn’t be in a situation where when it doesn’t rain, we are in that situation (reduced agricultural output) again,” Mr Qureishi said of agriculture, which accounts for nearly a third of gross domestic product (GDP).
Food security is one of the four priority sectors President Uhuru Kenyatta has pledged to focus State resources in his last term in office, but the implementation strategy is yet clear.
Stanbic’s growth outlook is similar to Barclays’ #ticker:BBK which on Tuesday projected a 5.5 per cent growth this year and six per cent next year, largely on better performance in agriculture, construction and tourism sectors. Treasury secretary Henry Rotich has forecast a growth of six per cent this year citing similar reasons.
“We should start seeing, just like the upgrade of the (Jomo Kenyatta International) Airport has helped in opening up new routes like the New York which will bring in more high-end visitors, projects like SGR generating economic benefits from people using it,” Barclays Africa Group chief economist Jeff Gable said.
Stanbic sees sluggish growth in credit to the private sector and budget cuts amid rising debt repayment obligations as downside risks to its growth outlook for Kenya.