ICEA Lion Group predicts 5.7percent growth

ICEA LION Group projects that the Kenyan economy is likely to slow this year to about 5.7 percent from 6 percent in 2018 dragged by lower performance by the agriculture and manufacturing sectors.

ICEA LION Asset Management Head of Research Judd Murigi says structural challenges within the two sectors such as high cost of electricity for manufacturing and reliance on rain fed agriculture, market access and post losses for agriculture would negatively impact on the overall economic growth.

However, ICEA LION Group notes that over the last five years, agriculture and manufacturing have the tendency of alternating years of strong growth with moderate growth.

ICEA LION Asset Management expects agriculture and manufacturing to slow this year, which will impact the economy that they project to slow from 6 percent in 2018 to 5.7 percent this year.

Get breaking news on your Mobile as-it-happens. SMS ‘NEWS’ to 22163

Head of Research Judd Murigi says Kenya needs several years of investing in tackling structural challenges in manufacturing and agriculture namely high cost of electricity, market access, increasing land under irrigation and reducing post-harvest losses, to break the cycle.

There has been an increase in the number of listed companies issuing profit warnings in recent years something that ICEA LION Asset Managers note is most pronounced for firms in the financial services, manufacturing and trade sectors.

Murigi dismissed assertions that profit declines were due to low private sector credit or elections, noting that the highest number of profit warnings were in 2015, which was not an election year and had private sector credit growth of more than 20 percent.

Tell Us What You Think