Kenya: IMF Predicts Growth after Peaceful Election
By Eric Sande
NAIROBI– An International Monetary Fund (IMF) mission, led by Mr. Domenico Fanizza has predicted a five per cent economic growth for Kenya this year on the back of domestic consumption and falling interest rates.
It also expects that the GDP growth would remain at the same level in 2013 as long as the country conducts peaceful and democratic elections.
In a statement to the media, Domenico said, “Kenya’s economy continues to do well in a challenging global economic environment. Agricultural production and domestic power generation have benefitted from normal weather conditions, reducing the country’s vulnerability to expensive oil and food imports.”
He added that tight monetary policy has brought inflation down in line with the authorities 5 percent target. With a gradual easing of monetary policy in the coming months, economic growth is set to accelerate. The external position has strengthened, with rising international reserves and a current account deficit set to shrink as growth in domestic demand has been brought in line with that of domestic output.
Looking ahead of the economic prospects for 2012 and 2013, IMF are pleased that it is favorable. In particular, continued regional integration, further trade diversification to new markets, and a pick-up in investment flows will allow Gross Domestic Product (GDP) growth to exceed 5 percent in both years amid improved private sector confidence.
Political stability in the run up to the March 2013 general elections and a smooth transition to devolved government at the county level will play a key role in ensuring that these objectives are met. Nevertheless, there is little scope for complacency. The weakened global outlook and the still unfolding Euro zone crisis pose threats for Kenya’s favorable economic performance. Thus, policies should continue to enhance Kenya’s economic resilience to ensure a sustained and stronger economic expansion, a necessary condition to reduce poverty.
The mission visited Nairobi from September 12-25, 2012 to carry out the fourth review under the three-year Extended Credit Facility (ECF) arrangement approved in January 2011. The members of the mission met with Minister for Finance Hon. Robinson N. Githae; Professor Njuguna Ndung’u, Governor of the Central Bank of Kenya (CBK); other senior government officials, and representatives of the private sector, civil society and development partners.