CEOs Anticipate Muted Growth in Q2 2023, According to a Survey

NAIROBI, Kenya, April 3 (Reuters) – According to a new survey, the majority of CEOs expect their companies to experience muted growth in the second quarter of the year as the country’s economic conditions remain largely unchanged.

According to the most recent Central Bank of Kenya CEO survey, most respondents believe that the high cost of inputs, particularly electricity and farm inputs, will keep business activity essentially flat in 2023 Q1.

“Nonetheless, increased government spending associated with the close of government financial year is expected to support business activity while seasonal factors may also support agriculture, transport and storage firms,” the survey notes.

Agricultural firms anticipate that adequate rainfall will help them manage short-term risks, even though purchase prices remain a major concern. Sales are also expected to benefit from seasonal factors.

Manufacturing firms anticipate a drop in sales and production as a result of rising energy and electricity costs, as well as a weakening shilling.

“Firms in transport and storage anticipate a boost in demand/orders due to seasonal factors as do firms in the ICT sector. Nevertheless, purchase prices are expected to remain elevated for firms across all sectors,” the survey stated.

Concerns about domestic inflation, the weakening Kenya Shilling, a prolonged drought, and the cost of credit dampened the CEOs’ optimism.

Firms cited global inflation, global recession, and energy prices as external threats to their expansion.

The firms expect to mitigate these constraints by managing costs and risks, diversifying their businesses, increasing sales and marketing, and digitizing their operations.

“A stable macroeconomic environment, an enabling business environment and a stable Kenya Shilling were highlighted as factors that could strengthen firms’ outlook in 2023,” said the survey.