The National Treasury has slashed off 50bps from its late August 2017 GDP growth projection of 5.50 percent in the recently released statistics.
The move by the Treasury marks the second time that it has trimmed the 2017 growth estimates in the year from an initial 6.00 percent target with the current political situation being blamed for the same.
The revision has been occasioned largely by a protracted electioneering period that saw fresh presidential elections held on Thursday, 26th October following the Supreme Court nullification of the August presidential poll.
The lower growth projections are more than likely to trickle down into revenue collections with Treasury announcing a 29 billion shillings deficit in the first quarter of FY17/18 albeit collecting 317.42 billion shillings.
The current political stalemate has weighed down on the private sector which has in turn impacted negatively on PAYE and other income tax categories. The gauge of the private sector activities, the CFC Stanbic Kenya Purchasing Managers Index (PMI) has indicated contraction economic activities, touching a 45-month low of 40.9 in September.
Market turnover rose to 2.1 million shillings driven by asset manager across book transaction, other than that the market was very quiet with some demand being seen on the IFB1/2016/009 towards the end of the day.
Secondary market trades will remain subdued going forward until some clarity is seen around the election process. The shilling closed weaker at 103.81 percent and is expected to further weaken on the back of the continued political temperatures.
Kenya’s economy continues to go through the political turmoil with the private sector is the hardest hit. The private sector has already announced that it has lost 10 percent of the country’s GDP or an equivalent of 700 billion shillings. Kenya Association of Manufacturers has estimated that more than 73 percent of the firms in the country will report a drop in earnings.