Kenya’s Economy will grow at 6% in 2020, Word Bank Predicts

The World Bank expects Kenya’s economy to grow by 6% this year, up from 2019’s estimated growth of 5.9%.

This is thanks to accommodative monetary policy, such as repealing of interest rate caps.

However, the bank warned that fiscal tightening slows the expected growth of Kenya’s economy, despite a progressive monetary policy. “In Kenya growth is expected to remain solid, but soften somewhat as accommodative monetary policy does not fully offset the impact of a fiscal tightening,” read a recent World Bank report.

Predictions of economic growth cow under the shadow of dipping trends in demand. For instance, slow demand, among other reasons, resulted in seventeen companies in Nairobi Stock Exchange issuing profit warnings due to massive decline in revenues. Experts argue that weak household demand might slow economic growth progress, causing businesses to run on excess capacity.

Moreover Kenya’s debt accumulation posits a short and long term risk, eventually threatening economic growth. At Ksh 5.96 trillion, a growing-enhancing spending born delay reforms that would nurture innovation.

The report further states, “For investors large projected government debt service cost creates policy uncertainty because they may eventually compel government to introduce distortionary taxation (including on future investment returns), curtail growth enhancing spending, or delay reforms that may support innovation and productivity-enhancing technologies.