The World Bank has projected Kenya’s economy to grow at a rate of 5.2 percent this year, boosted by increased investment by the private sector as the government reduces its activities in the domestic credit market.
This is faster than its earlier estimated growth of five percent, according to the latest Global Economic Prospects, a World Bank Group flagship report.
According to the report, growth in non-resource-rich countries such as Kenya is projected to hit 5.4 percent in 2024 and 5.7 percent in 2025.
“Increasing investment is expected to drive growth in Kenya and Uganda, partly owing to improved business confidence,” reads part of the report.
“Uganda will also benefit from infrastructure investment ahead of new oil production in 2025, and investment in Kenya should be boosted by increased credit to the private sector as the government reduces domestic borrowing,” it added.
Net domestic borrowing by the Kenyan government in the fiscal year starting in July 2024 is expected to reduce to Sh377.7 billion, or 2.1 percent of the gross domestic product (GDP), making space for increased borrowing by the private sector.
In the current fiscal year ending in June, net borrowing is projected at Sh451.7 billion due to tight global financial markets that have made it difficult for most frontier markets to contract external loans such as dollar-denominated Eurobonds.
In the third quarter of 2023, real GDP, the size of the economy adjusted for inflation, grew by 5.9 percent up from 4.3 percent in a similar period in 2022, boosted by a resurgence in agriculture which has been contracting due to drought, data from the national statistician shows. In Sub-Saharan Africa, the report forecasts that seven countries will grow at a faster rate than Kenya.
The tiny West African country of Niger will grow the fastest at 12.8 percent, followed by Senegal at 8.8 percent.
Rwanda, a member of the East African Community (EAC) like Kenya, is projected to grow at 7.5 percent, Ethiopia (6.4 percent), Guinea (5.8 percent).
Guinea Bissau and Liberia will grow at 5.6 percent and 5.4 percent respectively. In the third quarter of 2023, the country's real GDP grew by 5.9 per cent compared to 4.3 per cent in the corresponding quarter of 2022. This growth was mainly supported by a rebound in agricultural activities that had contracted in 2022, the Kenya National Bureau of Statistics said.
