Report reveals optimism about Kenya’s economic growth

NAIROBI, Kenya, Aug 2 -The Monetary Policy Comittee’s Private Sector Market Perceptions Survey, CEOs Survey, and the Survey of Hotels, has revealed general optimism about economic growth prospects for 2021.

Respondents of the Central Bank of Kenya sponsored surveys attributed this optimism to the continuing vaccinations and easing of COVID-19 containment measures.

Additionally, respondents were optimistic about the expected implementation of measures in the FY2021/22 Budget, including the economic stimulus programme and the continued investment in infrastructure.

However, respondents were concerned about continued uncertainties over the pandemic, increased taxes and heightened political activity.

The Survey of Hotels indicated continued recovery from the decline witnessed in April, particularly with regard to forward bookings.

The finding comes even as a new study by Deloitte that has projected Kenya’s GDP to recover from a
meagre growth in 2020 to post a 6.3 percent growth in 2021 on the back of strong agricultural sector
growth and a revamped manufacturing sector.

According to the report, the agricultural sector painted a grim outlook early last year, due to the locust swarm infestation affecting domestic agricultural production.

As of Q4 2020, the sector reflected a revamped outlook owing to favourable rains and success in beating back a
second wave of desert locusts.

As such, the sector is estimated to have posted a 5.1 percent growth in 2020, emerging as the silver lining sector.

At the same time, the manufacturing sector has also been noted to be recovering.

As of May last year, a study conducted by the Kenya Association of Manufacturers (KAM) revealed that 91 percent
of non essential goods manufacturers saw a significant fall in demand compared to 74 percent of essential goods manufacturers who had benefited from increased sales.

This led more than 40 percent of manufacturers to reduce their casual workforce and 27 percent of the manufacturers to reduce their permanent workforce.

However, as of Q3 Q4 2020, business sentiment in the manufacturing sector had largely improved due to the ease of social distancing measures, resumption of global aviation and opening up of country borders for external trade.

“The sector is estimated to have contracted by 2.5 percent in 2020 largely due to the vagaries experienced in Q1 and Q2 2020,” the study says.