COVID-19: Kenya’s Economic Recovery Pegged on Keeping Numbers Low

Kenya's Economic Recovery Pegged on Keeping Numbers Low

Kenya reported on Monday its total number of coronavirus cases had hit 17,975 with President Uhuru Kenyatta raising concerns over “the aggressive surge of infections” among young Kenyans.

The health ministry reported 440 new cases and 5 deaths on Monday, taking the total number of infections and fatalities to  17,975 and 285, respectively. 

The country’s Case Fatality Rate, stands at 1.6 percent, much lower than the global average according to the state.

“The upsurge in the COVID-19 cases has mounted speculation of stricter containment measures during Monday’s meeting between the President and the Governors. That said, COVID-19 fallout has been a drag in the economy and enhanced containment measures will further exacerbate the fragile situation,” Genghis Capital Analysts said in their weekly fixed income report.

Besides, Kenya extended the 9pm to 4am nationwide curfew for another 30 days and banned alcohol sales in eateries. However, eased restrictions on domestic air travel with expectations that international flights will resume August.

“We also understand that our economic health as a country is ultimately tied to keeping our infections and fatalities as low as possible.” 

There will be little tourism, scarce investment and falling trade if our headlines start to match those of countries that have been hardest hit by the pandemic,” Kenyatta said during his televised address to the nation.

“If, and when, necessary, these measures will be made even more stringent.  We will do this without hesitation because we hold precious the life of every Kenyan,” President Kenyatta emphasised.

Genghis Capital says the pandemic has worsened consumption with reduced aggregate income and business investment has been weighed by the knock-on confidence.

As the Central Bank of Kenya’s Monetary Policy Committee meets Wednesday,  Genghis Capital says an accommodative monetary policy stance would be supportive to dial-up demand.

“Nonetheless, we doubt the efficacy of the policy cuts with inflation charting a disinflationary trend in the second quarter. Furthermore, we are less convinced that credit to the private sector has picked up in the current environment.”

The World Bank estimates that the country’s economic growth is expected to drop to 1.5 percent this year, and contract 1 percent in the worst-case scenario under the impact of the coronavirus outbreak that has hit tourism, agricultural exports and remittances in its April report.