Kenya’s economy is estimated to have expanded by 4.9 percent in the year 2017 compared to a revised growth of 5.9 percent in 2016.
The slowdown in the performance of the economy has been attributed to uncertainty associated with a prolonged electioneering period coupled with adverse effects of weather conditions.
In 2017, Kenya went into a general election whose presidential results were nullified by the Supreme Court, forcing for another election. In between, there were violent protests that rocked several parts of the country forcing most investors to adopt the ‘wait-and-see’ attitude.
According to an Economic Survey by the Kenya National Bureau of Statistics, key macroeconomic indicators largely remained stable and therefore supportive of growth in 2017.
The survey notes that interest rates declined in 2017 due to the impact of their capping that became effective in September 2016. There is a debate to have the law on interest rates either dropped or amended.
In the money market, the Kenyan Shilling strengthened against most of the major trading currencies but weakened against the Euro and the US Dollar in 2017. At the beginning of 2018, most analysts had predicted doom for the shilling with some saying that it would fall as low as 107 shillings against the dollar. The shilling, however, has remained resilient, hitting its all-time 2-year high of 99.90 shillings to the dollar a week ago.
The current account deficit widened in the year under review on account of the significant growth of imports against a slower growth of exports. There was a moderate build-up in inflationary pressures mainly due to a significant increase in oil and food prices during the year under review. Consequently, the inflation rate rose from 6.3 percent in 2016 to 8.0 percent in 2017.
Performance across the various sectors of the economy varied widely, with Accommodation and Food services; Information and Communication Technology; Education; Wholesale and Retail Trade; and Public Administration registering accelerated growths in 2017 compared to 2016.
On the other hand, growths in Manufacturing; Agriculture, Forestry and Fishing; and Financial and Insurance decelerated significantly over the same period and therefore dampened the overall growth in 2017.