Kenya's Annual GDP For 2022 Pegged At 5.1%

Kenya’s Annual GDP For 2022 Pegged At 5.1%

By Cytonn Investments / Published January 4, 2023 | 1:24 pm

KEY POINTS

The average GDP growth for 2022 is forecasted to be 5.1 percent, with Cytonn Investments projecting Kenya’s economy to grow by 4.5 percent in 2022.

KEY TAKEAWAYS

Economic growth in Q3’2022 was mainly driven by expansions in accommodation and food, wholesale and retail trade, professional administration and support, and finance and insurance sectors recording 22.9%, 9.1%, 8.7%, and 5.3%, respectively in Q2’2022.

The Kenyan economy recorded an average growth of 5.6 percent growth between January to September 2022, a decline from the 7.7 percent average growth recorded in a similar period in 2021.

The performance in the sector was however lower growths of 127.5%, 6.4%, 13.4%, and 11.8%, respectively recorded in Q3’2021.

The growths in these sectors were supported by continued post-COVID-19 economic recovery due to the lifting of travel restrictions and ease of cross-border transactions. However, the sectoral growth remained subdued due to uncertainties of the electioneering period, and the adverse macroeconomic conditions experienced in the country for the majority of the year.

Notably, the Agricultural sector contracted for the fourth consecutive quarter driven by erratic weather patterns and increased costs of agricultural inputs.

The average GDP growth for 2022 is forecasted to be 5.1 percent, with Cytonn Investments projecting Kenya’s economy to grow by 4.5 percent in 2022.

“We believe that growth will be weighed down by the elevated inflationary pressures brought by the high fuel prices globally and the supply chain bottlenecks worsened by the Russian- Ukrainian war. However, we expect that the GDP will be supported by the easing of food inflation in the medium term driven by the fertilizer subsidy program introduced by the current administration to reduce agricultural input costs, coupled with the ongoing rainfall experienced in several parts of the country,” said Cheryl Onyango, an Investment Analyst at Cytonn Investments PLC.

“Since Agriculture is the leading contributor to GDP, improved productivity within the sector will help to anchor inflation and GDP in the long run,” added Cheryl.