The African Development Bank has said that Kenya’s real GDP is projected to grow by 6.0 percent in 2019 and 6.1 percent in 2020.
AfDB says the will be anchored on the improved business confidence and continued macroeconomic stability will contribute to growth domestically as well as tourism and the strengthening global economy externally.
The government plans to continue fiscal consolidation to restrain the rising deficit and stabilize public debt by enhancing revenue, rationalizing expenditures through zero-based budgeting, and reducing the cost of debt by diversifying funding sources.
Inflation is projected to be 5.5 percent in 2019 and 5.4 percent in 2020 due to prudent monetary policy.
Kenya also benefits from renewed political momentum (including the 2010 constitution and devolution), a strategic geographic location with sea access, and opportunities for private investors, and the discovery of oil, gas, and coal along with continued exploration for other minerals.
Among downside risks are possible difficulties in making fiscal consolidation friendly to growth and in finding affordable finance for the budget deficit caused by tightening global markets.
Boosting domestic resource mobilization and enhancing government spending efficiency are critical to restrain public borrowing.
Kenya continues to face the challenges of inadequate infrastructure, high-income inequality, and high poverty exacerbated by high unemployment, which varies across locations and groups (such as young people).
Kenya is exposed to risks related to external shocks, climate change, and security. The population in extreme poverty (living on less than $1.90 a day) declined from 46 percent in 2006 to 36 percent in 2016. But the trajectory is inadequate to eradicate extreme poverty by 2030.
Kenya’s Big Four (B4) economic plan, introduced in 2017, focuses on manufacturing, affordable housing, universal health coverage, and food and nutrition security.
It envisages enhancing structural transformation, addressing deep-seated social and economic challenges, and accelerating economic growth to at least 7% a year. By implementing the B4 strategy, Kenya hopes to reduce poverty rapidly and create decent jobs.