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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya economy expected to decelerate to 5.5 percent in 2017

NAIROBI (Xinhua) -- Kenya’s economy is expected to slow down from 5.9 percent in 2016 to 5.5 percent in 2017, the World Bank forecast on Wednesday.

World Bank Senior Economist Allen Dennis told a media briefing in Nairobi that the contraction is due to the ongoing drought, weak credit growth as well as an increase in international oil price.

“However, in the medium term, we expect growth to pick up due to the strengthening of the global economy as well as a rebound in the tourism sector,” Dennis said during the launch of the 15th Edition of the Kenya Economic Update.

The biannual publication comes at a time when Kenya is transiting between the second medium term plan and the third medium term plan that is currently under preparation.

The Bretton Woods institution projects that the Gross Domestic Product (GDP) growth will accelerate to 5.8 percent in 2018 and 6.1 percent in 2019 as Kenya unleashes it underlying growth potential.

Kenya’s GDP growth is outperforming its Sub-Saharan African peers, especially those that are dependent on oil and other commodities. Dennis said that Kenya faces a number of risks to its future economic growth.

“Internal risks include the potential for fiscal slippages, current drought conditions being prolonged beyond 2017 as well as security concerns,” he added.

According to the senior economists, external risks could come from weaker than expected growth from Kenya major trading partners as well as a U.S. interest rates hike.

Dennis urged the government to maintain prudent macroeconomic policies that will help the East African nation continue with its strong economic performance.

“While Kenya is currently facing certain economic headwinds that are likely to dampen GDP growth in 2017, I am happy to note that the GDP forecast is expected to pick up in 2018 and 2019 as headwinds ease,” said Diarietou Gaye, the Bank’s Country Director for Kenya.

Collaborative efforts between government and the private sector are required, and a supportive policy and regulatory environment strengthened so that relevant tools can be leveraged.

The report says Kenya’s economic performance is expected to strengthen once the rains return to normal, the global economy picks up, the tourism sector rebounds, and some of the underlying causes of slow credit growth are resolved, as well as the completion of major infrastructure projects.

             

 

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