AfDB Projects Kenya’s Economic Growth at 5.6% in 2023

The African Development Bank (AfDB) has predicted that Kenya’s economy will develop at a rate of 5.6% this year.

The lender maintains in its updated regional economic outlook for 2023 that the country will have rebound growth, which will be fueled by expansion in services and household consumption.

It is an upward prediction compared to last year, with the lender expecting GDP to grow by 5.5%.

“The economy is expected to rebound further next year, growing at 6.0 percent,” AfDB says.

It states that a planned drop in overall inflation, which is anticipated to lessen in 2024, will support the projected expansion in services and household spending.

“Average annual Inflation rose to 7.6 percent last year, from 6.1 percent in 2021, driven by food and energy inflation. The headline mark is projected to rise to 8.6 percent this year and ease to 5.9 percent in 2024,” AfDB says.

The lender also predicts that the country’s monetary policy will remain strict and that the fiscal deficit will decrease from 6.3% of GDP last year to 6.1% this year and 5.4% in 2024.

“Current account deficit is projected to narrow from 6.0 to 5.2 percent of GDP this year and 5.0 percent in 2024, attributable to a recovery in global demand.”

The lender warns that there are significant risks to the forecast projections, including the impact of a prolonged Russian invasion of Ukraine on commodities prices, limited global finance, a drought, and a sluggish global economic recovery.

According to the report, Kenya must diversify its exports and market destinations, improve domestic resource mobilisation, deepen financial sector reforms, and quicken structural reforms if it wants to protect itself from such repercussions.

Regionally, it is projected that East Africa’s economic growth will pick up from 4.4% last year to 5.1% this year and 5.8% in 2024.

In comparison to Central Africa, North Africa, Southern Africa, and West Africa, the forecast is anticipated to be the highest.

According to projections, they will grow at rates of 4.9, 4.6, 1.6, and 3.9%, respectively.

According to the AfDB, a resurgence in economic growth in Uganda (6.5%), Ethiopia (5.8%), Kenya (5.6%), Djibouti (5.4%), and Tanzania (5.3%) will be a major driver of growth in the East African area.