The Central Bank of Kenya (CBK) has cut its economic growth forecast to 5.1 per cent, down from 5.4 per cent, citing slower growth in the second quarter on diverse factors including suppressed credit flows.
The country registered a slower 4.6 per cent GDP growth in the second quarter compared to 5.6 per cent at the same time last year.
“The growth prospects for 2024 have been revised downwards to 5.1 per cent from our previous projection of 5.4 per cent reflecting the outcomes of the slowdown seen in the second quarter and the slowdown in private sector credit to several key sectors,” CBK Governor Kamau Thugge told a media briefing yesterday.
The Kenyan economy grew at its slowest pace in four years during the second quarter since the pandemic as key sectors including agriculture, electricity and water supply, transport and storage, accommodation and food services, finance, and insurance all marked a slowdown in growth.
Construction, mining, and quarrying sectors contracted resulting in the slowest second-quarter growth since the pandemic. The services sector is expected to anchor growth this year by expanding by 6.2 per cent, led by accommodation and food services.
Manufacturing, which marked the only sectorial expansion in three months ended in June, is meanwhile, set to grow by 2.7 per cent from two per cent in 2023.
The collapse of private sector credit growth to 1.3 per cent in August has been factored in the expected growth deceleration even as the services and agriculture sectors provide key offsets.
External shocks from a potentially worsening geopolitical environment are seen as the main risk to the growth outlook.
GDP grew by at 5.6 per cent in 2023 compared with 4.9 per cent in 2022 on positive outcomes in most sectors of the economy.
The agriculture, forestry, and fishing sectors expanded by 6.5 per cent in 2023, marking a recovery from the 1.5 per cent contraction recorded in 2022.
