Kenya Economic Update, April 2019, No. 19 : Unbundling the Slack in Private Sector Investment – Transforming Agriculture Sector Productivity and Linkages to Poverty Reduction
The Kenyan economy rebounded in 2018 and economic activity in the first quarter of 2019 was healthy, although emerging drought conditions could curtail GDP growth for the remainder of the year. The economy expanded by 6.0 percent in the first three...
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| Format: | Report |
| Language: | English |
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World Bank, Nairobi
2019
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| Online Access: | http://documents.worldbank.org/curated/en/820861554470832579/Kenya-Economic-Update-Unbundling-the-Slack-in-Private-Sector-Investment-Transforming-Agriculture-Sector-Productivity-and-Linkages-to-Poverty-Reduction http://hdl.handle.net/10986/31515 |
| Summary: | The Kenyan economy rebounded in 2018 and
economic activity in the first quarter of 2019 was healthy,
although emerging drought conditions could curtail GDP
growth for the remainder of the year. The economy expanded
by 6.0 percent in the first three quarters of 2018 compared
to 4.7 percent during the same period in 2017 driven by
strong private consumption in part due to improved income
from agricultural harvests in 2018, remittance inflows, and
lower food prices. The Bank's GDP growth estimate for
2018 is about 5.8 percent. A strong pick-up in economic
activity in Q1 of 2019 was reflected by real growth in
consumer spending and stronger investor sentiment.
Nonetheless, a delayed start to the March-May 2019
"long" rainy season could affect the planting
season-resulting in poor harvests. In addition, ongoing
emergency intervention to address food shortages in several
counties could impose fiscal pressure constraining capital
spending. These developments have slowed the growth forecast
for 2019 and for the medium term relative to our October
2018 Update. Inflation remains within the government's
target range of 5±2.5 percent. Headline inflation averaged
4.7 percent in 2018 compared to 8.0 percent in 2017,
primarily due to the slowdown in food inflation, which in
turn offset a temporary acceleration in energy prices.
Further, core inflation has remained below 5 percent,
suggesting benign underlying demand pressures. With low
inflation, monetary policy could be more accommodative to
support growth if needed, but with interest rate caps tied
to the policy rate, further loosening would be constrained.
The low inflationary pressure has also been supported by a
stable local currency. The shilling has traded within a
narrow band of Ksh100/US Dollas-Ksh.103/US Dollars in 2018,
thereby serving as a nominal anchor to inflationary expectations |
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