FORECAST

Private sector 2022 performance looks positive - Stanbic Bank

The overall economy to continue growing steadily in the range of nine per cent quarter -to quarter

In Summary
  • The country's PMI  to remain above 50 points next month pushed up by back-to-school orders. 
  • Kenya, just like the global economy is growing more resilient to Covid-19 shocks
A tractor ferrying harvested cane to Sony Sugar Factory near Awendo town.
A tractor ferrying harvested cane to Sony Sugar Factory near Awendo town.
Image: KNA

Kenya's private sector performance is expected to maintain a productive trend this year despite foreseen uncertainties.

In an interview with the Star, Purchasing Managers’ Index (PMI) for Kenya who is also Stanbic Bank's fixed income and currency strategist Kuria Kamau attributed the growth to ease of Covid-19 pressures.

''The ease of restrictive Covid-19 preventive measures globally has created fertile ground for business recovery and overall economic growth,'' Kamau said.  

He added that Kenya, just like the global economy is growing more resilient to Covid-19 shocks even as the virus morphs into more severe variants.

''This level of optimism is expected going forward, aiding business recovery even as the country moves closer to the general election in August,'' Kamau said.

He expects the country's PMI  to remain above 50 points next month pushed up by back-to-school orders. 

Even so, he expects various economic sectors to grow negatively as those pulled down by Covid-19 wave-like tourism and education solidify.

''Agricultural sector that accounts for 25 per cent of the country's GDP is likely to be affected by low rainfall as forecasted by the Kenya Metrological Department,'' he said.

Even so, others like tourism which were crushed to the core by the virus that manifested in the country in March 2020 are expected to grow as optimism among travellers globally grows on the heightened vaccination campaign. 

He expects the overall economy to continue growing steadily in the range of nine per cent quarter -to quarter as witnessed in the second and third quarters. 

Kenya’s private sector performance improved at a solid pace in January, driven by a sharp increase in output and new business.

According to the monthly Purchasing Managers’ Index (PMI) by Stanbic Bank, the sector grew 53.2 during the month under review, up from 51.4 in December the highest reading for three months.

A PMI of 50.0 signals an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

While he is optimistic about business recovery, the analyst is concerned about the cost of living that is likely to be fuelled by global currency fluctuation on a stable US dollar, rising fuel prices and other global risks. 

The shilling has shed more than five per cent in value against the greenback and is expected to drop more as the US hikes its interest rate regime in March. 

On Monday, the International Monetary Fund (IMF) said that faster than expected Federal Reserve moves could rattle financial markets and trigger capital outflows and currency depreciation.

Yesterday, the shilling traded flat 113.30 against the US Dollar as the demand for the greenback by importers grew. 

Kamau, however, says that currency depreciation is a global phenomenon due to the strengthening of the US dollar. 

''The shilling just like other global currencies is under pressure which is likely to surge as the US's interest rate regime changes in March. It is, however a positive for exporters and the tourism sector,'' Kamau said.