The Central Bank of Kenya is projecting the country’s economic growth to drastically reduce to 2.3 percent this year as the CoronaVirus pandemic continues to affect key trading partners economies.
To mitigate against Covid-19’s adverse effects, the Monetary Policy Committee-MPC of the Central Bank has lowered the lending rates by 25 basis points to 7 percent.
As the Coronavirus pandemic continues to dent the country’s economy, battering key sectors, policy makers at the central bank of Kenya projecting economic recovery will not be so soon.
According to the MPC, the decision by the national carrier KQ and other carriers to start cargo services and ease of lockdowns in key international markets will boost the country’s horticulture sector as the demand for local produce rises in key international markets.
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The committee says it expects a decline in remittance from Kenyans in the Diaspora but the deficit will be offset by lower oil imports with the current account deficit expected to remain at 5.8 percent in 2020.
Inflationary expectations are well anchored within the target range, despite the economy operating below its potential, driven by favorable weather conditions, lower international oil prices, and the reduction of Value Added Tax (VAT) from 16 percent to 14 percent among other government interventions.
The private sector grew by 8.9 percent in the twelve months to march 2020 with the growth observed in the manufacturing, building and construction, trade, transport and communication and consumer durables.