World Bank projects Kenya’s 2022 GDP growth at 4.9pc

NAIROBI, Kenya, Dec 14 -World Bank has projected Kenya’s economy to grow at the pre-pandemic level of 4.9 percent in 2022 and 2023 supported by the strong recovery in some sub-sectors of the economy.

Describing the performance as ‘robust’ World bank said that the projected growth will further be aided by the ongoing vaccination drive, private consumption aided by household income and job growth, and fiscal consolidation that will free resources for private sector credit and growth.

‘Strengthening external demand is expected to support agriculture, and the recovery in industry and services is expected to continue, though services are expected to recover more gradually, with some sub-sectors like education having bounced back while others like Tourism only partially and facing a more protracted recovery,” World Bank said in its report dubbed from recovery to better jobs.

The figure released by World Bank is a downgrade from the 6 percent GDP projections released by the Central Bank of Kenya.

Kenya recorded a strong resurgence in the economy in Q2 2021 with GDP expanding by 10.1 percent and further accelerated to 5.3 percent year-on-year (y/y) in H1 2021.

The  economy contracted by 0.3 percent in 2020

The report, nonetheless listed the uncertainties surrounding the COVID-19 pandemic among the setbacks to the economic recovery noting that increased fiscal pressures could crowd out private investment and exacerbate debt vulnerabilities.

“Intensifying drought conditions are severely affecting parts of the country and should this continue poses a major downside risk to the economy,’ the report said warning that the human, social and economic costs of the drought will continue to mount.

A slackening in global growth, higher than anticipated energy prices, and tighter external financing conditions were also listed as the primary external risks to the country’s economic recovery.

The external risks, the report noted could adversely impact Kenya’s exports, tourism, FDI inflows, and diaspora remittances

‘There is a risk that this could filter into general inflation expectations and narrow policy space. Kenya is integrated with global capital markets, and tighter global financial conditions associated with the policy normalization process in high-income economies (especially the US) could also prompt a quicker withdrawal of domestic monetary policy accommodation, creating more headwinds for the recovery,’ the report added.