Kenya’s economy set for growth

Aleksandar Todorovic-Kenya-cityIncreased consumption as a result of low oil prices is a contributing factor to the growh of Kenya's economy. (Image source: Aleksandar_Todorovic)The International Monetary Fund (IMF) has announced that Kenya’s economy is projected to grow seven per cent by 2016

Investments in infrastructure especially the US$4.5bn standard gauge rail (SGR) and low oil prices are among the anchors on the booming economic growth in the coming year.

This is according to the IMF’s Regional Economic Report 2015 on sub-Saharan Africa report, recently released in Nairobi.

Overall, net foreign direct investment is predicted to rise from 1.1 per cent of the GDP last year to 1.7 per cent this year and further to 1.9 per cent next year, the IMF report noted. The country is likely to benefit from low oil prices with improvement in trade balance, cutting the current account deficit.

The Bretton Wood organization forecasts an improvement of the negative trade balance on goods from this year’s 17.6 per cent to fall to 17.3 per cent next year.

Over the last year, global oil prices dropped from a high of US$115 per barrel to a low of below US$70. This is now expected to boost consumption in Kenyan households and firms with positive implications on the country's economy.

Manufacturing, infrastructure developments and lower oil prices are expected to spur growth over the year, increasing demand in households.

“Higher aggregate demand is likely to boost private investment particularly in the manufacturing sector,” noted the World Bank in a recent report.

Data from the bank also showed that Kenya's manufacturing sector grew by 4.3 per cent in the three years to 2013 compared to the 6.2 per cent growth of the economy.

Mwangi Mumero

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