Kenya’s economy remains strong despite uncertainties in the global economic outlook amid the Russian invasion of Ukraine. The central bank said Wednesday it has not lowered its 2022 growth projections.
“Our growth projection has not changed from what we had before. Russia and Ukraine are not significant trading partners for us and as such, our GDP projection would not dramatically deviate from the war,” CBK Governor Patrick Njoroge said after the Monetary Policy Committee meeting on Tuesday, March 29, 2022.
“The indirect impact would be through global growth although we saw this from the COVID-19 crisis where the impact was not as significant.”
The CBK projects a 5.9 percent Gross Domestic Product (GDP) growth anchored primarily on a rebounding agricultural sector which is expected to grow by 6.3 percent in 2022 after a 0.9 percent dip in 2021.
On Tuesday, Dr. Njoroge said the global economic outlook remained uncertain, reflecting the ongoing Russia-Ukraine conflict that started at the end of February, significant uncertainty about the policy responses in the advanced economies, and a spike in COVID-19 cases, especially in China.
Prices of commodities particularly oil, wheat, and fertilizer have risen sharply as a result of supply disruptions, adding to the already elevated global inflationary pressures. Financial market volatility has increased amid adjustments in monetary policy in advanced economies.
Russia and Ukraine account for 1.5 percent of Kenya’s total exports, he said, and 2.7 percent of all imports.
The Monetary Policy Committee (MPC) noted that inflation expectations remain anchored within the target range supported by the Government’s policy interventions, and leading economic indicators show improved performance.
Overall inflation declined to 5.1 percent last month from 5.4 percent.
The MPC noted that exports continue to rebound recording a 12.1 percent growth in 12 months to February 2022 supported by higher receipts from horticulture and manufactured goods exports which grew 7.9 percent and 31.3 percent respectively.
“The Monetary Policy Committee (MPC) met on March 29, 2022, against a backdrop of a changed global outlook with heightened geopolitical tensions, volatile commodity prices, the Covid-19 (coronavirus) pandemic and measures taken by authorities around the world in response to these developments,” MPC chairman and CBK governor Patrick Njoroge said after its meeting.