The world bank has predicted a growth in Kenya’s economy by five per cent in 2023, 5.2 per cent in 2024 and 5.3 per cent in 2025.
According to an Economic Update released by the World Bank, conducive weather conditions which are expected to fortify agricultural output. In addition to that, the report states that the growth will be driven by a drop in global commodity prices and strong private investments.
After a sturdy growth rate of 7.5 percent in 2021, Kenya’s gross domestic product experienced a drop to 4.8 percent in 2022. There is however renewed potential for economic expansion.
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In the report, heavy rainfall plays a key role in increasing agricultural yields and encouraging hydroelectric power generation which is anticipated to have a positive effect on the country’s economic performance.
The report however warns of an interference in economic growth by a decline in public investment, fiscal consolidation efforts that are underway, high electricity tariffs and a tight monetary policy stance.
Several sectors are however predicted to grow, the education, hotels and accommodation and transport sectors due to the low COVID infection rates and the gradual relaxation of travel restrictions.
Furthermore, an inflation rate of 7.8 percent is expected up from 7.6 percent in 2022 an outcome of the depreciating Kenyan shilling and a rise in fuel and electricity prices. The inflation rate is however expected to fall back to 5.7 percent between 2024 and 2025.
The report additionally states that Kenya’s debt-to-GDP ratio is expected to get to 64.8 percent this month, a 2.6 percentage points decline from the previous year.
An outcome credited to the government in its efforts towards generating revenue from local taxes and a careful approach towards acquiring new debts.
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Below average rainfall which could have a detrimental effect on agricultural productivity, political tensions that might lead to instability and the probability of tightening monetary policies by the Central Bank have been listed as hindrances to economic growth.
