Kenya’s Economy to ‘Decline Significantly’ in 2020 Due to Coronavirus – Central Bank

CBK Keeps Rates Unchanged Says Kenyan Economy Remains Resilient

Wheat farming in Kenya. PHOTO I David Jones. @Cropnuts_agron

The coronavirus outbreak could impact negatively the Kenyan economy this year according to the Central Bank.

Central Bank of Kenya (CBK) on Monday said as a result of the pandemic, economic growth is expected to decline significantly in 2020, from a baseline estimate of 6.2 percent to possibly 3.4 percent.

The Monetary Policy Committee (MPC)  said this will arise from reduced demand by Kenya’s main trading partners, disruptions of supply chains and domestic production. 

“The fundamental concerns and anxieties center on the health impact, job losses, and duration of the crisis. The ongoing interventions by the Government are aimed at containing the pandemic and moderating the economic and social impact,” Dr. Patrick Njoroge, Chair of the MPC said.

CBK further recognised that global growth is highly uncertain but expected to weaken significantly in 2020, mainly due to the adverse direct and indirect impact of COVID-19 across the world.

Coronavirus Pandemic and The Economic Threat, What Next for Kenya?

In Kenya, key sectors to be impacted include tourism, agriculture, and manufacturing which were hit the hardest hit due to shutdowns in major markets and the disruption of the global supply chain.

Combined, the 3 sectors account for 43.8% of Kenya’s GDP in 2018.

“Based on the impacts witnessed so far, we believe that Coronavirus may have a 10.0% to 25.0% impact on GDP growth for the year 2020. The 10.0% impact is an optimistic case in the event the outbreak is contained, and a 25.0% impact in the event it is not contained,” according to Cytonn Investments in Potential Effects COVID-19 on Money Market Funds.

“As such, the coronavirus could reduce Kenya’s GDP growth to a range of 4.3% to 5.2% for the year 2020 depending on the severity of the outbreak and economic implications for Kenya.”

Kenya has 16 confirmed cases of coronavirus.