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World Bank revises Kenyan economic growth
December 21, 2017, 5:07 pm

Kenyan economy is expected to rebound in 2018 as headwinds such as drought, slowing credit access and politics, which hurt growth this year, begins to ease, said the World Bank in its latest assessment of the country’s economy.

The bank said last week it had cut back forecast of the country's growth this year to 4.9 percent from an earlier estimate of 5.5 percent. It expects East Africa's largest economy to rebound to a growth of 5.5 percent next year before accelerating to 5.9 percent in 2019.

"We believe Kenya's economy can rebound and strengthen through specific measures that safeguard macroeconomic stability, enable the recovery of private sector credit growth, and mitigate the impact of future adverse weather conditions on the agriculture sector," said Diarietou Gaye, World Bank Country Director for Kenya.

The economy has witnessed several shocks this year that forced the government and international monetary fund to scale down their growth projection. A severe drought in the last quarter of 2016 hurt agricultural production in Kenya that led to the World Bank scaling down its growth forecast in April this year by half percent.

A rate-capping law that was introduced in the fourth quarter of last year contract contributed to the slowing of credit to businesses, which also hurt economic growth.
The slowdown in credit growth coupled by a prolonged politicking season that saw the country go to its first ever presidential election rerun at the end of October also hurt the country's key sectors such as agriculture, manufacturing and trade.

Meanwhile, the International Monetary Fund (IMF) has cautioned that Kenya's rising debt levels need to be contained to cushion the economy from unplanned shocks. The fund said that while the economy has proven to be resilient to drought and prolonged electioneering period this year, the rising public debt was a concern that needed to be addressed urgently to check any shocks to the economy in the future.


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