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Kenya's economy to grow by 1% - new IMF outlook

In Summary
  • It expects the country's GDP growth to expand by 4.7 per cent next year. 
  • IMF projected a deep recession in 2020 with global growth projected to be -4.4 per cent. 
A customer at a kiosk in Westlands, Nairobi yesterday
A customer at a kiosk in Westlands, Nairobi yesterday
Image: ANDREW KASUKU

The International Monetary Fund (IMF) has revised Kenya's economic growth prospects upwards in the latest series of the World Economic Outlook.

The lender now says Kenya's Gross Domestic Product (GDP) will expand one per cent this year, up from negative one per cent projected in June. It expects the country's GDP growth to expand by 4.7 per cent next year. 

Kenya's growth prospect is above that of the world and Sub Saharan Africa which is set to experience negative growth punched by Covid-19 ruins.

 
 
 

The New York-based lender has projected the country's inflation to rise to 5.3 per cent this year compared to 5.2 per cent last year. Even so, the cost of living is expected to ease in 2021 at five per cent.

The current account balance is set to shrink to 4.9 per cent this year on stable agricultural imports as a result of sustained rainfall pattern, almost 100 basis points better than last year when the country recorded a deficit of 5.8 per cent.

Late last month, National Treasury Cabinet secretary Ukur Yatani said the country's economy was growing at 2.6 per cent, the highest in the region.

The CS attributed the positive growth despite tough social economic challenges that came with Covid-19 to the swift economic policy adopted by the government to respond to the pandemic.

Regionally, the economy is expected to grow fastest in  Ethiopia and Tanzania at 1.9 per cent, with the Republic of Congo posting the least growth at negative seven per cent. 

On Tuesday, IMF projected a deep recession in 2020 with global growth projected to be -4.4 per cent. 

''We continue to project a deep recession in 2020 with global growth projected to be negative 4.4 per cent.  This is a small upgrade relative to our June numbers. We expect growth to rebound partially in 2021, coming back to 5.2 per cent,''IMF chief economist Gita Gopinath said.

 
 
 

As the world tries to bounce back from the economic turmoil caused by the COVID-19 pandemic, Gopinath argues that there will be risks to the recovery, but also a chance things can improve.

‚ÄúThere are broad risks to the upside and to the downside. On the upside, we could have positive development in terms of treatments and vaccines that could hasten the end of this health crisis,''Gopinath said.