Kenya's economy will expand going into 2017 driven by low oil prices, which have helped stabilise the Kenyan shilling and kept inflation within the target, World Bank has said.
The forecast indicates Kenya has also benefited from increased private consumption and public infrastructure investment, while resilience in exports has helped to keep the shilling stable.
“As a large commodity importer, Kenya continues to benefit from low oil prices,” World Bank said on Thursday in the Africa Pulse, a biannual analysis of economic trends in sub-Saharan Africa.
The outlook is, however, dim for the oil exporters in the region as they are expected to experience contraction of their economies this year.
The region’s largest economy and oil exporter, Nigeria
will record a contraction, as declining oil production and manufacturing weigh on activity, although it may rebound moderately in 2017 as oil prices stabilize and oil production increases.
Angola is also expected continue to struggle with slow economic growth, as a combination of low oil prices, high inflation, and tight policy weighs on private consumption and investment.
World Bank said slow economic growth should also be expected in Ghana which is facing oil production outages.
“However, the outlook (in Ghana) for 2017 is largely positive. The launch of a new oil field in the second half of 2016 should help improve fiscal and external positions,” it said.
South Africa, an oil importer like Kenya, is expected to grow marginally and pick up moderately in next year.
But private consumption in the region's second largest economy, is expected to remain weak owing to rising unemployment, high household indebtedness, and elevated inflation while investment growth is expected to remain sluggish because of policy uncertainty and longstanding structural issues, including unstable power supplies.
The overall growth in sub-Saharan Africa is projected to fall to 1.6 per cent, from three per cent in 2015, reflecting the effects of an unfavourable external environment and domestic headwinds.
“This represents a downward revision from the growth projection of 3.2 per cent for the region in the April issue of Africa’s Pulse. The less favorable forecast reflects the disappointing economic activity in the first half of the year and continued headwinds since then,” World Bank said.