Kenya's economy to grow 6.9pc in New Year

Treasury, IMF, World Bank upbeat on Kenya's 2021 recovery. The outlook offers hope to millions plunged into poverty by the devastating shocks of Covid-19 containment measures.

The National Treasury building in Nairobi.

File | Nation Media Group

By  Constant Munda

Business Reporter

Nation Media Group

What you need to know:

• World Bank economists have taken a more optimistic year-on-year growth outlook on Kenya than their counterparts at the IMF.
• The World Bank estimates the pandemic rendered two million persons in Kenya poor.

The economy is seen rebounding to a growth of between 4.7 and 6.9 per cent in 2021 from barely a percentage growth this year, offering hope to millions of households which were plunged into poverty by the devastating shocks of Covid-19 containment measures.

Economists at the Treasury, International Monetary Fund and the World Bank Group have forecast economic activity to recover from the adverse effects of the pandemic that brought key sectors such as tourism and education to their knees.

The World Bank, which estimates the economy contracted by 1.0 to 1.5 per cent in 2020, sees the uninterrupted resumption of schools from January lifting gross domestic output to a growth of 6.9 per cent in 2021.

World Bank economists have taken a more optimistic year-on-year growth outlook on Kenya than their counterparts at the IMF who in October forecast the economy to pick up from an estimated 1.0 per cent to 4.7 per cent growth in 2021.

Stable environment

The Treasury, which in November downgraded growth outlook for 2020 to 0.6 from 2.5 per cent, sees the economic outlook expanding 6.4 per cent in 2021.

“The growth outlook will be supported by stable macroeconomic environment, ongoing investments in strategic priorities of the government under the Big Four agenda, turn around in trade as economies recover from Covid-19 pandemic and expected favourable weather that will support agricultural output,” Treasury secretary Ukur Yatani says 2021 outlook.

Travel restrictions and shutdown of hotels, as well as the closure of schools in March, pushed the economy into a tough in the April-June 2020, with GDP — a measure of economic output — shrinking 5.7 per cent.

The World Bank estimates the pandemic rendered two million persons in Kenya poor after poverty levels by four per cent on massive job losses and reduced earnings. 

“A major factor in this strong rebound is the unusual impact on the national account’s treatment of education sector output normalising, which is projected to add 2.2 percentage points to real GDP growth next year (2021).”