Kenya’s Economy Projected to Grow 6.3% from 6.1% on Macroeconomic Stability

Kenya's Parliament Scrap Interest Rate Caps on Commercial Lending

President Uhuru Kenyatta said Kenya’s economic growth in 2019 will rise to 6.3% from an estimated 6.1% last year.

In a state of the nation address to the National Assembly and the Senate, the President said: “In 2019, we expect an even stronger growth of 6.3%, reflecting continued improvement in the business environment, momentum associated with execution of the Big Four Agenda, and sustained macroeconomic stability.”

In 2018, provisional estimates show the economy grew by 6.1% largely driven by the wholesale and retail trade, real estate, information and communication, and tourism.

“It is worth noting that, despite the challenges facing the wholesale and retail trade, the sector has attracted new international supermarket chains and continues to support the expansion of domestic players.”

The 2019 African Economic Outlook by the Africa Development Bank projects the country’s real GDP to grow by 6.0% in 2019 and 6.1% in 2020 attributed to improved business confidence and continued macroeconomic stability. “Externally, tourism and the strengthening global economy will contribute.”

However, among downside risks are possible difficulties in making fiscal consolidation friendly to growth and in finding affordable finance for the budget deficit caused by tightening global markets. Boosting domestic resource mobilization and enhancing government spending efficiency are critical to restrain public borrowing.

Kenya continues to face the challenges of inadequate infrastructure, high income inequality, and high poverty exacerbated by high unemployment, which varies across locations and groups (such as young people). Kenya is exposed to risks related to external shocks, climate change, and security.

The population in extreme poverty (living on less than $1.90 a day) declined from 46% in 2006 to 36% in 2016. But the trajectory is inadequate to eradicate extreme poverty by 2030.