Citibank said on Tuesday its 5.6 per cent economic growth forecast for Kenya in 2018 is largely pegged on expectations of recovery in the services and manufacturing sectors.
The bank’s growth outlook is higher than a consensus forecast of about 5.3 per cent by about 17 local and global firms.
Elevated political tension as a result of prolonged presidential polls pushed economic growth to a five-year low estimated at 4.8 per cent in 2017, Citibank’s chief economist for Africa David Cowan said.
“We think the ongoing recovery in tourism sector will persist with direct flights to the US, we should see a bit of pick up in manufacturing, construction is set to stabilise going forward and financial services will also recover a bit,” Mr Cowan told an investors’ breakfast organised by American Chamber of Commerce Kenya in Nairobi today.
“We have seen business confidence return after the elections and that’s important.”
Concerns around recovery of farming activities, which accounts for about a quarter of gross domestic product, remains the biggest downside risk to Citibank’s growth outlook for Kenya, he said.
Environment and Forestry Principal Secretary, Charles Sunkuli, warned of a possibility of La Nina, a condition of unusually cold ocean temperatures linked to prolonged dry spell in East Africa this year.
A monthly consensus forecast by FocusEconomics – a Barcelona-based economic analysis firm which tracks growth projection from 11 global leading banks, consultancies and think-tanks – last month put Kenya’s growth outlook at 5.3 per cent.
The World Bank Group and the International Monetary Fund (IMF) have projected a growth of 5.5 per cent for Kenya this year, while African Development Bank (AfDB) has forecast economic expansion at a rate of 5.6 per cent.
Treasury secretary Henry Rotich has projected a growth of between 5.5 and six per cent, while Central Bank of Kenya governor Patrick Njoroge has been the most bullish in his forecast at 6.2 per cent.
StanChart is the only firm that has so far projected a growth of below five per cent among 17 domestic and international firms which have so far released their outlook reports on Kenya.