CBK sees Kenyan economy defying multiple global shocks to grow 5.7pc

The Central Bank of Kenya (CBK) has tipped the country’s economy to grow by 5.7 percent this year, which is a significantly more positive outlook compared to projections by the World Bank and the International Monetary Fund (IMF).

The World Bank has projected a growth of 5.2 percent in 2024, which it says will be driven partly by private sector investment and recovery in private consumption supported by reduced inflationary pressures.

The IMF, on the other hand, has adopted a dimmer outlook on the country’s growth prospects this year, projecting Gross Domestic Product (GDP) expansion at 5 percent, attributed to increased demand for goods and services, especially driven by lower food prices.

But CBK Governor Dr Kamau Thugge has maintained the most positive outlook, pegging the growth on increased output from the agricultural sector, which currently contributes nearly a quarter of Kenya’s economy.

“The economy is estimated to have expanded by 5.6 percent in 2023 and is projected to grow by 5.7 percent in 2024, mainly supported by the rebound in the agriculture sector attributed to favourable weather conditions, the resilience of the services sector, and improved global growth outlook,” said Dr Thugge.

The CBK governor said Kenya’s economy is well placed to defy a multitude of global shocks and increased uncertainties, projecting growth to remain above the global and Sub-Saharan Africa averages in 2023 and 2024, “pointing to the resilience and diversified nature of the economy”.

The projection is slightly higher than an estimated economic growth of 5.6 percent last year, and would be the highest since 2021 when the country’s economic output jumped by 7.6 percent.

“Leading indicators point to the continued strong performance of the economy in the first quarter of 2024, reflecting robust activity in the agriculture and service sectors,” said Dr Thugge in a presentation to lawmakers last week.

Inflation, which plays a key role in influencing economic growth, has slowed down in recent months – hitting a two-year low of 5.7 percent in March – primarily driven by a decline in food prices.