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October 22, 2017

Uganda may overtake Kenya as regional giant

A general view shows Hoima town, Uganda April 27, 2015. REUTERS
A general view shows Hoima town, Uganda April 27, 2015. REUTERS

The just ended 2017 election outcome, agriculture output, and inflation levels are set to determine Kenya’s second half year growth, a new insight by Bloomberg Intelligence Economist has revealed.

Dubbed East Africa Insight, the analysis by economists Mark Bohlund also reveals that Uganda may expand faster than Kenya for the first time since 2011 amid stronger farming output.

Based on the outcome of the election results, analysis Bohlund shows that if the opposition is granted victory, there are high chances that the GDP will grow.

“BI Economics expects that an opposition victory would engender a more expansive fiscal policy in coming years than outlined in the 2017-18 budget, because of pledges to accelerate fiscal devolution and undertake structural reform” He said.

The analysis shows that Kenya’s Gross Domestic Product growth fell to 4.7 per cent year-over-year in first quarter from 6.1 per cent in the preceding quarter, partly reflecting a 1.1 percentage point drop in agricultural output, the sharpest contraction since 2009.

It also pointed out a 2.7 per cent month-over-month drop in food prices in June, the largest drop since 2010 as a cause for the GDP growth drop as compared to -3.2 per  cent and -2.0 per cent drop in Rwanda and Uganda respectively.

According to statistics from Kenya Bureau of Statistics, Uganda’s GDP data showed growth of 1.8 per cent quarter-over-quarter in first quarter, following a relatively robust expansion of 1.4 per cent in the fourth quarter. The growth was attributed to a 3.4 per cent rise in agriculture output after four consecutive quarterly contractions. 

On infrastructure, Kenya is performing better interms of implementation, with flagship projects such as the Standard Gauge Railway and the Karuma hydropower dam.

The report recommeds a higher rate of implementation of such projects in Uganda for economic growth to accelerate and to achieve any convergence of incomes with Kenya. Weakness in private investment placed a heavier burden on government capital spend.

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