World Bank cuts Kenya’s growth to 1.5pc

National Treasury. FILE PHOTO | NMG 

By LYNET IGADWAH
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Summary

• The World Bank has revised Kenya’s 2020 economic growth forecast to 1.5 percent this year but warned of possible contraction in case of prolonged Covid-19 outbreak.
• Tourism, agricultural exports are some of the sectors hardest hit by the outbreak-induced economic slowdown, the bank says in its latest economic update.
• The 1.5 percent forecast is a dip from the six percent growth the World Bank had predicted in January.

The World Bank has revised Kenya’s 2020 economic growth forecast to 1.5 percent this year but warned of possible contraction in case of prolonged Covid-19 outbreak.

Tourism, agricultural exports are some of the sectors hardest hit by the outbreak-induced economic slowdown, the bank says in its latest economic update.

The 1.5 percent forecast is a dip from the six percent growth the World Bank had predicted in January.

“The Covid-19 shock is expected to further reduce growth...with large impacts on services (transport, retail trade, tourism, events, leisure, etc), industry (manufacturing and construction), and agriculture,” the World Bank said in its economic update on Kenya released yesterday.

The heat on the economy continues to be felt with several firms announcing job cuts, unpaid leaves and hiring freeze in the wake of the disrupted business activity.

The bank said a more severe global recession would hit Kenya’s export demand, tourism earnings and remittances, while weather-related shocks and a widening fiscal deficit could also present more downward risks.

Floods have complicated social distancing rules vital in curbing the spread of Covid-19, in a country that is staring at food shortage due to locust invasion.

The World Bank announcement comes a day after the Treasury further cut Kenya’s economic growth forecast to 2.5 percent in 2020 from the 5.4 percent recorded last year.

The 5.4 percent growth was a drop from the 2018 economic growth of 6.3 percent attributed to a slowdown in manufacturing, agricultural and construction sectors.