Last year, 2016 the Kenyan economy struggled to maintain a steady though staggering growth beating all odds to emerge as one of the fastest growing economies in the region. The World Bank in March 2016 through its Kenya Economic Update (KEU), had projected the country’s economic performance to grow by 5.9% in 2016 up from 5.6% in 2015, and expected to hit 6% in 2017. The report attributed this growth to low oil prices, good agriculture performance, supportive monetary policy, and ongoing infrastructure investments.
As per the Kenya National Bureau of Statistics (KNBS)’s 2016 quarterly reports; in the first quarter 2016, the economy rose by 5.9% compared to 5.0% for the same quarter in 2015. As for the second quarter, the economy grew by 6.2% in 2016 compared to 5.9% in 2015 for the same period. This growth was supported by good performances in agriculture, forestry and fishing; transportation and storage; real estate; and wholesale and retail trade.
In the third quarter, the economy expanded by 5.7% in 2016 compared to 6.0% in 2015 in the same period. Inflation rate rose from 6.1% in 2015 to 6.3% in 2016 for the same quarter, an increase that was attributed to an upsurge in prices of food and beverages but was countered by decrease in prices of utilities and transport due to decrease in prices of oil internationally by 9.3% compared to 2015 in the same quarter. The signing into law of the Banking Amendment Act, 2016 in August last year saw interest rates drop from 16.75% in September 2015 to 13.84% in the same month of 2016. The Kenyan shilling strengthened against the US dollar, Euro and Sterling pound but weakened against the Yen. With the current account deficit dropping by 10.4% from a deficit of Ksh 112.4 billion in 2015 to a deficit of Ksh 100.7 billion in 2016 in the third quarter and the balance of payments deficit also dropped from a deficit of Ksh 51.4 billion in 2015 to Ksh 5.7 billion in 2016 for the same quarter.
2017, kicked off with the youth unemployment rate standing at 17.3%, interest rates at 10%, inflation rate at 6.35%, Government Debt to GDP at 52.8% and the stock market, NSE 20 share index dropping to 2971 points from 3014 points, the lowest since 2009. Some Economists have questioned if the 6.0% projection growth rate in 2017 is realistic given the uncertain nature of the forth coming General Election, capping of interest rates and the stagnating private sector credit growth. Also with some companies like Airtel Kenya and Orange, banks like Standard Chartered, Ecobank, Family bank, Sidian bank and First Community bank moving to retrench some of their staff due to high staff costs. According to a report by the Focus Economics, the GDP growth in 2017 is likely to decline to 5.7%