Kenya’s Economy to Grow at 6.3% Amid Fiscal Imbalances

Kenya’s economy is set to grow at the rate of 6.3 percent in 2019 according to projections given by the Commercial Bank of Africa during its fourth Economic Forum held to discuss how to achieve growth amid fiscal imbalances brought about by the country’s debt course.

The forum featured Dr. Mbui Wagacha, Senior Economic Advisor, Executive Office of the President and Former Ag. Chair, Board of Central Bank (CBK), as the keynote speaker and a panel of experts from the public and private sectors who offered deep insights and understanding on debt issues.

“Kenya is looking at 6.3 percent GDP growth in 2019. Now, the reason that number is important is that we are coming from about 5.7 percent GDP growth, so we have a gap of 0.6 percent GDP to catch up and get up the economy and reach 6.3 percent which is the projection of the CBK in their Monetary Policy statement,” said Dr. Wagacha.

Speaking at the event, CBA Kenya Chief Executive Officer Mr. Jeremy Ngunze told the forum that the bank is keen on sparking conversation and economic thoughts on important financial matters in the country.

“Kenya has historically shown considerable resilience albeit the external environment. In fact, despite the global gloom, Kenya’s growth outlook remains relatively upbeat, with economists projecting that growth will remain solid at 5.7% in 2019, a decent shot above the global and sub-Saharan Africa averages of 3.5 percent,” said Mr. Ngunze.

This optimism is predicated on sustained healthy government spending, a resilient private sector, low oil prices, and a fairly stable economic and political landscape. Inflation is well within the central bank’s target and the currency has remained stable.

The global economy remains in an expansion phase, growth is evidently a gear lower, impacted by risks such as increased fear of recession, headwinds from trade wars and tighter global liquidity, uncertainty over Brexit, the slowdown in China and the limited scope by major central banks and governments to respond to severe economic shocks.

The National Treasury is expected to cut the deficit in the 2019/2020 financial year to KES572.2 billion or 5% of Gross Domestic Product (GDP), from the projected KES635.3 billion (6.3% of GDP) in the year ending June 2019. The cut is, however, largely based on increasing revenue at a higher pace than expenditure on the back of tax reforms. In the 2019/20 fiscal year, the National Treasury has projected that revenue will rise by 13.6% to KES2.08 trillion, versus a 7.6% increase in expenditure to KES2.7 trillion.

CBA Economic Forum was launched in January 2018 and previous three editions covered areas like the Government’s Big Four Agenda, Kenya’s tax structure, the Manufacturing, and Agriculture sectors.

The forums provide top mind analysis and thought leadership on thematic issues affecting businesses and the overall economy.

Today’s panellist included Dr. Wagacha, Jared Osoro – Director of Research and Policy at Kenya Bankers Association (KBA) Centre for Research on Financial Markets and Policy, John Mutua – Programmes Coordinator at the Institute of Economic Affairs, Tom Omariba – Vice-Chair KEPSA Public Finance Sector Board, and Faith Atiti – Senior Research Economist, CBA.