Kenya’s economy is projected to grow to at least 5.6 this year with inflation expected to average at 5.8 percent.
According to a 2020 Economic Outlook Report by Cytton Investments GDP growth will be driven by improved private sector credit and expected recovery in the agriculture sector due to the prevailing prolonged long rains which have been experienced in various parts of the country since late last year.
During the last quarter of last year, the purchasing manager index deteriorated in October to November amid weakened business sentiment which dropped to a 33-month low in November.
Cytonn Investments say the improved private sector credit growth and expected growth in the agriculture sector will be the main drivers of the economy this year.
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Inflation is expected to average at 5.2 percent which is within the government’s target range of between 2.5 to 7.5 percent.
The investment firm predicts an upward pressure on interest rates following the repeal of the interest rate cap which in effect is expected to result in increased competition for bank funds from both the private and public sectors as the Government tries to raise funds to plug in the budget deficit.
The outlook for equities remains positive due to a stable macroeconomic environment that will see a 12 percent growth in corporate earnings.
However, the government’s strategy to cut its spending in a bid to reduce its fiscal deficit may affect the economy.
The shilling is expected to remain stable against the dollar oscillating between 101-104 shillings due to a sufficient CBK’s dollar reserve.