Tuesday, October 26, 2021

Kenya’s Economy will Grow by 5%, Driven by ICT and Construction

  • A report by World Bank listed COVID-19 vaccines as a key driver to Kenya’s economy this year
  • According to the report, Kenya’s economy could have grown faster, was it not for the third wave of the virus
  • Overall, Sub-Saharan Africa will emerge from the 2020 recession sparked by the COVID-19 pandemic

The Kenyan economy will grow by 5% and rebound faster than Sub-Saharan Africa’s average growth of 3.5% this year.

World Bank Projects Kenya's Economy to Grow by 5% in 2021.
City skyline in Nairobi, Kenya. Photo: Getty Images.
Source: Getty Images

This is according to the Africa Pulse report by the World Bank, which indicates that improvement in construction and ICT sectors, as well as the continued rollout of COVID-19 vaccines, will be the biggest drivers of growth.

“Non-resource-rich countries, such as Côte d’Ivoire and Kenya, are expected to recover strongly at 6.2 and 5.0%, respectively,” the report said.

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Kenya’s Private Sector Grows Marginally in September, But Inflation Continues to rise

Similarly, Mauritius and Seychelles are projected to grow by 5.1% and 6.9%, respectively, underpinned by a successful vaccination rollout that helped boost mobility, which is key for the tourism industry in these island nations.

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Delta variant

In the report, World Bank also noted that the economy could have grown at a much faster rate, were it not for the third wave of the coronavirus, which was driven by the Delta Variant.

It also revealed that the country may grow at an average rate of 4.8% between 2022 and 2023.

The positive outlook reflects improvements in construction, education, real estate as well as information and communication sectors.

“Inflation remains contained near the central bank objective, and monetary policy continues to support growth. Government debt is projected to rise from 65.8% of GDP in 2020 to 69.2% in 2021,” the report said.

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Kenya’s Exports Grow by 11.5% between January and August 2021 Driven by Horticulture and Manufactured Goods

Inflation in Kenya

As reported by TUKO.co.ke, Kenya’s year-on-year inflation rose from 6.57% recorded in August to 6.91% in September, driven by a rise in food prices as well as transport costs.

The Kenya National Bureau of Statistics (KNBS) said last week that food and non-alcoholic beverages had risen by 10.63% while transport costs had gone up by 9.21%, compared to a similar period last year.

Other commodities that pushed up the rate of inflation during the period under review include the housing, water, electricity, gas and other fuels indices, which rose by 6.08%.

Sub-Saharan Africa economic growth

Overall, the report noted that Sub-Saharan Africa will emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3% in 2021, marking an improvement from April’s forecast of 1%.

According to the report, the rebound is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade.

Read also

Kenya’s Year-on-Year Inflation Hits 6.91% in September, Pushed by Higher Food and Transport Costs

However, the growth remains vulnerable given the low rates of vaccination on the continent, protracted economic damage, and a slow pace of recovery.

The report added that growth for 2022 and 2023 will also remain just below 4%, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in SSA.

Source: Breaking News

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