NAIROBI, April 9 (Xinhua) -- The World Bank has projected Kenya's economy to grow by 5.7 percent in 2019, down from an estimated growth of 5.8 percent in 2018, an official said on Tuesday.
Peter Chacha, senior economist at World Bank group told journalists in Nairobi that the economic slowdown is partly due to a potential drag from drought conditions in the country.
"The medium-term growth outlook is stable but recent threats of drought could drag down growth. GDP growth is projected at 5.7 percent in 2019 after accounting for potential drag from drought, rising to 5.9 percent and 6 percent, respectively in 2020 and 2021, supported by private consumption, a pickup in industrial activity and still strong performance in the services sector," Chacha said during the release of the 19th edition of the Kenya Economic Update.
Chacha noted that currently Kenya's growth is also being supported by ongoing key investments to support implementation of the country's national development blueprint, the Big Four Agenda as well as improved business sentiment.
He added that a strong pick-up in economic activity in the first quarter 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," he revealed.
According to the report, performance in the services industry is projected to remain stable as the sector is expected to grow at an average rate of 6.5 percent over the medium term.
The study indicates that private consumption is expected to continue spurring growth even as government consumption tapers due to fiscal consolidation.
The report shows that recovery in private consumption is underpinned by improving purchasing power especially due to a growing middle class, low inflation as well as solid remittances inflows.
The review also urges the government to fast-track a comprehensive solution to factors that led to the imposition of interest rate caps for an eventual repeal of the caps and revival of the potency of monetary policy.
"The continued retention of interest rate caps has constrained monetary policy space," says the survey.
