Kenya Economy Vulnerable to Global Financial Tightening

The economy of Kenya is vulnerable to the effects caused by the global financial tightening. This is according to a report released by the Institute of Chartered Accountants in England and Wales. The United Stated Federal Reserve is to raise interest rate later this month and Kenya is one of the countries that are likely to be affected.

Kenya has been ranked number six as the most vulnerable economy in Africa. The country has scored below 250 points out of the 300 points. The deficit account of Kenya currently stands at 10.4 percent. According to the report, Ghana is the weakest economy in Africa with 273 points out of the 300 points followed by Guinea, Tanzania and the Democratic Republic of Congo.

Among the growing private sectors in the African countries, Ghana emerged the first one with a credit growth in the private sector rate being at 18.4 percent. Kenya was the second with the rate of 17.8 percent between the year 2013 and 2015.

In the anticipation of the rising rates by the US Federal Reserve, a vulnerable index was created and it was based on three specific areas like the current account balance of the country, the growth of the private sector of the country and the ratio of the country’s foreign debt to reserves. Kenya, according to the report, has great economic prospects that are estimated at 5.5 percent over the next three years.

In the month of October this year, Kenya was among the emerging markets that appealed to the United States Federal Reserve to delay the increasing of the interest rates as a way of shielding them against the shocks to their economies.

In the past few months, Kenyans had had to content with high interest rates especially after the shillings dwelled on the receiving end of the dollar.

Article by Juma Fred.