Kenya to grow by 6pc in 2015 : IMF

A view of Olkaria power station at night. Rampant insecurity and weakening economies in Kenya’s major export markets could dampen the country’s hopes of attaining a double-digit growth rate in the near term. PHOTO | JOYCE KIMANI 

In Summary

• External risks resulting from impending marked slowdown in emerging markets would weaken demand for commodity exports from the region, with immediate negative effects on external and fiscal positions, the institution said.
• “A more marked slowdown than currently expected would immediately impact external positions and fiscal revenues, but, over time, could also reduce the appetite of foreign investors for projects in the region,” it said in a statement.
• However, IMF expects that the country’s economy will advance by about 6.2 per cent in 2015 powered by increased investment in infrastructure and growth of agriculture and service sectors
• “Solid growth will continue in the lion’s share of the region’s countries, driven by sustained infrastructure investment, buoyant services sectors, and strong agricultural production,” the report said.

By LILIAN OCHIENG
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Rampant insecurity and weakening economies in Kenya’s major export markets could dampen the country’s hopes of attaining a double-digit growth rate in the near term.

The International Monetary Fund, in its latest economic outlook for sub-Saharan Africa, also warned that the Ebola epidemic in parts of West Africa could have far-reaching implications on regional economies.

The Bretton-Woods institution has already adjusted downwards its growth forecast for Kenya in 2014 from the initial 6 to 5.3 per cent.

It said that high insecurity, especially at the coast, and break-out of other forms of violence in parts of the country could significantly affect growth.

“The Ebola outbreak could have much larger regional spill-overs, especially if it is more protracted or spreads to other countries, with trade, tourism, and investment confidence severely affected,” the fund said.

External risks resulting from impending marked slowdown in emerging markets would weaken demand for commodity exports from the region, with immediate negative effects on external and fiscal positions, the institution said.

MORE MARKED SLOWDOWN

“A more marked slowdown than currently expected would immediately impact external positions and fiscal revenues, but, over time, could also reduce the appetite of foreign investors for projects in the region,” it said in a statement.

However, IMF expects that the country’s economy will advance by about 6.2 per cent in 2015 powered by increased investment in infrastructure and growth of agriculture and service sectors.

Combined growth in Kenya and other sub-Saharan countries will help push the region’s growth by about 5 per cent in 2014 and 5¾ per cent in 2015.

“Solid growth will continue in the lion’s share of the region’s countries, driven by sustained infrastructure investment, buoyant services sectors, and strong agricultural production,” the report said.

IMF urged governments to look into factors hampering regional trade such as high tariff and non-tariff barriers, as well as poor intra-regional transport infrastructure.

Kenya, Uganda and Rwanda are already making progress with talks to open up the region for free trade under the infrastructure summit commonly referred to as the Coalition of the Willing.

“…..ongoing negotiations of successor trade agreements with the European Union and the United States offers an opportunity to support diversification efforts,” IMF said.

It also commended African countries that have recently updated their economic statistics, saying the move would help policy makers make more accurate decisions.
“Having a better (and more accurate) picture of the economy is essential to guide policy makers, investors, and consumers on the current economic trends, and help them take informed economic decisions. This could lead to new investment opportunities, help create jobs, and reduce poverty in the medium to long term,” it said.