President Uhuru Kenyatta. PHOTO | SALATON NJAU | NMG
The International Monetary Fund (IMF)
has forecast slower growth this year citing effects of drought, sluggish
private sector credit growth and August General Election jitters.
The IMF expects the economy to expand by 5.3 per cent compared to 5.8 per cent last year.
The
main risks facing the economy were the adverse weather and changes to
the banking law last year, which capped commercial lending rates at four
percentage points above the Central Bank Rate.
Growth
prospects have also been dimmed by uncertainties related to the next
General Election in which President Uhuru Kenyatta is seeking a second
term while Opposition leader Raila Odinga has built an alliance to
challenge him in August 8 poll.
In its latest report on
the sub-Saharan Africa economy, the IMF said growth would pick up after
this year, driven by the expected normalisation of rainfall, a firmer
global economy, a rebound in tourism and the resolution of challenges
curbing credit growth.
It forecast 5.8 per cent growth in 2018.
“Drought would dent the growth momentum somewhat,” said the IMF.
“Upcoming elections in Angola and Kenya will make it
difficult for these countries to address weakness in their underlying
fundamentals.”
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