Kenya’s growth forecast will not be less than 5pc in 2017 – CBK

Kenya’s Central Bank is in a dilemma on how the country’s economic growth outlook will be for 2017 as regards to the impact of the repeat presidential election.

“We do not have a crystal ball to tell you how Kenya’s growth outlook for 2017 will be like,” said Central Bank of Kenya Governor Dr. Patrick Njoroge.

However, he sounded optimistic that the economy is unlikely to suffer due to the political uncertainty over the repeat of the presidential elections.

He said the growth numbers would remain consistent with a growth projection of 5.7 percent in 2017.

Read: Kenya’s National Treasury retains  inflation target range at 5pc 

“Strong growths were reported in manufacturing, wholesale and trade, accommodation and restaurants, transport, ICT…all these accounting for nearly a third of the GDP. That is really the story from the numbers in Q1,” said Njoroge a day after the regulator’s Monetary policy Committee retained the Central Bank rate at 10 percent.

Quarter two numbers are expected to be released at the end of September which will paint a clearer picture on the impact of the August polls on the economy.

“We have not made a new focus on the growth numbers. Our basis will be based on Q2 numbers, but there is no likelihood for the growth being less than 5 percent.”

Other sectors have shown resilience with tourism particularly exhibiting strong growth.

“Tourist arrivals in Jomo Kenyatta international airport are close to 2013 levels with July arrivals almost at 100,000. But what is interesting is that even as we have recovered substantially in Nairobi, arrivals in Mombasa remain depressed,” added Njoroge.

He also cited that tourist arrivals in Kenya for 2017 remain ‘weaker than 2016’ for the remaining three months of the year. October 39 percent, November 40 percent and December 37 percent compared to 63 percent, 55 percent and 51 percent respectively in 2016.

“The political noise level increases then consumers will delay their decisions and this will ultimately have a knock-on effect on the economy,” says  Njoroge.

Domestic Borrowing

The Governor disclosed that due to the National Treasury’s fiscal policies, they had been able to manage domestic borrowing in fiscal year 2016/17 without an overdraft.

“This is because the government was disciplined in domestic borrowing,” said Njoroge. “On the cost of domestic borrowing, this is the first time that we have a yield curve for government securities. It is true that some badly advised investors have bid way higher. But we have stuck to the yield curve because  the government has not been desperate for cash.”