The International Monetary Fund (IMF) has slashed Kenya's economic growth forecast for this year to 5.3 per cent amid fears that a persistent drought, sluggish private sector credit growth and rising prices of oil will slow down the economy.
The Fund had earlier predicted the country's economic growth rate will slow in 2017 within the 5-6 per cent range from about 6 per cent last year as investors take a wait-and-see attitude before the August general election.
In its latest World Economic Outlook released Monday, the IMF also announced an upward review of its forecast for global economic growth in 2017 from 3.1 per cent in 2016 to 3.5 per cent in 2017 and 3.6 per cent in 2018.
“In sub-Saharan Africa, a modest recovery is foreseen in 2017. Growth is projected to rise to 2.6 per cent in 2017 and 3.5 per cent in 2018, largely driven by specific factors in the largest economies, which faced challenging macroeconomic conditions in 2016,” said IMF.
Last week, the World Bank forecast Kenya’s GDP growth would decelerate to 5.5 per cent, a 0.5 percentage point mark down from the 2016 forecast over poll jitters and drought.
The country’s economy expanded by 5.7 per cent in the third quarter of 2016, a slight dip from the 6 per cent recorded in the third quarter of 2015 on the back of stunted growth in agricultural, manufacturing, real estate and construction sectors.
In February, the Central Bank of Kenya downgraded economic growth forecast to 5.7 per cent in 2017 from 5.9 per cent last year, citing uncertainties in the global economy.