Kenyan CEOs optimistic about growth but project increased food prices -CBK

NAIROBI, Kenya, Dec 6 –  Kenyan Chief Executive Officers have remained optimistic about improved economic activity with 95 percent  projecting solid growth in November and December, a market perceptions survey released by the Central Bank of Kenya has revealed.

The poll conducted in November among 365 private sector bosses noted that the lifting of the curfew provided a more flexible environment  for many  businesses which were previously affected by the pandemic.

Sixty nine percent of the CEOs interviewed expected a pick up demand during the festive season while another 36 percent said the growth will be further boosted during the back to school seasons in 2022.

Uncertainties linked to COVID-19 pandemic and short school holidays remained a concern for 38 percent of the respondents who  said it could result in lower than usual festive season activity with less travels.

“76 percent respondents expected the COVID-19 pandemic to remain a risk to the expected pick-up in growth citing the uncertainty both locally and globally, the slow vaccine rollout in Kenya, mutations of the virus, and subdued activity in some sectors such as tourism,” the survey added.

Meanwhile, 85 percent of the CEOs  projected that food prices will be higher  in the next two months due to lower than anticipated rains and drought conditions in some parts of the country.

Another 74 percent projected increased demand for both goods and services as the economy recovers after full re-opening, and for consumables during the festive season.

“These factors were expected to exert upward pressure on inflation. In addition, 30 percent of respondents expected the elevated fuel prices and recent movements in the exchange rate of the Kenya Shilling against the US Dollar to exert moderate pressure on inflation in the next 2 months,” the survey noted.

Overall, 36 percent of the respondents projected a decline in inflation in the next 2 months due to the Government intervention to reduce fuel prices, and lower prices for some food items supported by the current short rains.

The country’s inflation declined to 5.80 percent in November as compared to 6.45 recorded in October and  was credited to an increase in prices of commodities across the country.

Approximately 94 percent of the CEOs expected private sector credit growth to be supported by recovery while another 45 percent listed COVID-19 as a risk to its growth.

Twenty three percent of the respondents said the suspension of Credit Referencing Bureaus (CRB) as a risk to private sector growth