- This growth, matching the 2010 – 2019 average growth rate, was largely propelled by strong rebounds in the industrial and services sectors
- The growth trajectory, however, is not bereft of headwinds.
Image: OZONE
As Kenya strides into the 2022 calendar year, particularly important due to it being an election year, it does so with positive energies, especially from an economic front.
Despite the turbulent times over the past two years, the Kenyan economy has remained resilient and is expected to keep up the pace into the second half of the 2021-2022 fiscal cycle.
This is following a strong recovery in the first half of the 2021-2022 fiscal cycle wherein the country’s economic performance-matched pre-pandemic levels, and in some instances, exceeded.
According to a recent report by the World Bank, despite multiple COVID-19 variants that threatened to diminish Kenya’s recovery efforts within the 2021 calendar year, the country recorded an impressive growth of five per cent in the first half of the 2021-2022 fiscal year.
This growth, matching the 2010 – 2019 average growth rate, was largely propelled by strong rebounds in the industrial and services sectors of the economy as catalysed by various economic policy measures instituted by the Government of Kenya within this period.
In addition, the easing of drastic Covid-19 containment measures in the latter half of the 2021 calendar year, inclusive of the removal of curfews and travel restrictions, coupled with the gradual and steady resumption of business in the country has had the positive impact of propelling demand-side recovery.
The increase in private sector activities, supported by increased employment and stabilising household incomes, has improved consumption all around.
Looking forward at the second half of the 2021-2022 fiscal year, and further at the 2022-2023 fiscal year, Kenya’s economic performance is expected to remain steady.
Provided that the current momentum is maintained, the country is expected to record an overall growth rate of five per cent with respect to the 2021-2022 fiscal year and an estimated 4.9 per cent with respect to the 2022-2023 fiscal year commencing July 2022, per the World Bank.
Estimates by the Central Bank of Kenya paint an even more positive picture with 2021-2022 and 2022-2023 growth expected to land at 6.4 per cent and six per cent, respectively.
From a medium-term perspective, growth remains positive, bolstered by strong performances in the services sector, particularly in higher-skilled services sub-sectors such as Education, Health and Global Innovator Services (, ICT, Finance and Professional Services).
Specifically, the services sector is expected to drive job creation, and in turn increase, overall employment opportunities and household incomes thereby benefiting the wider economy at large.
Kenya’s growth trajectory, however, is not bereft of headwinds. Persistent threats by Covid-19, adverse climate change effects such as drought and insufficient rainfall, and political tensions caused by an election year may attempt to destabilise the anticipated growth if not adequately responded to from a policy front.
Further, external risks such as rising energy prices and debt-related pressures may create undue pressure on Kenya’s economic performance.
As these potential headwinds have been identified, it is imperative that mitigative positions are explored at the earliest should we intend to maintain our positive economic growth into the 2022-2023 fiscal year.