Economy Projected to Grow 5.8% in 2022/23

Kenya’s economy will grow 5.8 percent in the financial year 2022/23 and average 6.2 percent over the medium term, the National Treasury said.

The growth will be supported by a surge in private sector activities, including recoveries in agriculture, the Treasury said in the Budget Review and Outlook Paper for 2022.

“This outlook will be reinforced by the ongoing implementation of the strategic priorities of the government under the ‘Big Four’ agenda and the economic recovery strategy. Additionally, the government is implementing the third phase of the economic stimulus programmes that target strategic interventions in agriculture, health, education, drought response, policy, infrastructure, financial inclusion, energy and environmental conservation,” the Treasury stated.

The ministry, however, observed that there are various domestic and external risks that may dampen the economic outlook.

“On the domestic front, the emergence of new Omicron Covid-19 variants may cause restrictive measures. Other risks relate to lower agricultural output due to potential adverse weather conditions,” the Treasury stated.

On the external front, the key risks include uncertainty about the global outlook, reflecting adverse effects of the conflict in Ukraine, inflationary risks from rising prices of food and oil and supply chain constraints as well as increased global financial markets volatility amid the tightening of monetary policy in advanced economies.

The Treasury noted that the government has faced difficult policy trade-offs in the past months to secure economic recovery and navigate existing macroeconomic challenges amid diminishing fiscal space.

The challenges include subsidising pump prices through the Petroleum Development Levy Fund, reducing electricity tariffs by 15 percent to lower the cost of power and granting a waiver of import duty on 540,000 metric tons of white maize imported into the country.