Business / Economy
Tuesday, 24 May 2016 14:43 EATnewsdesk@kenyafreepress.com
The Central Bank has predicted that Kenya’s economy will grow by 6 per cent in 2016, forecasting that macro-economic stability, adequate balance of payment on agriculture, horticulture and leasing of Kenya aircraft will continue to rev growth. CBK Governor Dr Patrick Njoroge said the drivers of growth will on macroeconomic stability, stronger agriculture performance, public infrastructure investment and tourism recovery.
Dr Njoroge said better exchange rate will help in narrowing the current account deficit which now stands supported b improved earnings from horticulture exports and diversified markets. The Governor said Kenya’s main trading partners in the region remains strong, suggesting better prospects for export performance.
According International Monetary Fund (IMF) Kenya’s main trading partners in the region is expected to be 3.0 per cent in sub Saharan Africa, 4.6 per cent in Comesa, 6.1 per cent in East Africa 2.4 in SADC, 1.3 per cent in SACU and 3.2 per cent in ECOWAS. “The growth rate of trade in sub Saharan region has been declining since 2014 when it was estimated to be 5.3 per cent, 3.4 in 2015 but is expected to rise to 4.0 per cent in 2016,” Dr Njuroge said.
According to the IMF statistics, Kenya’s strong growth in trade will mainly be in Comesa and EAC. He said he expect inflation to fall further below 5 per cent and thereby remain was within the Government’s target range. “The decline will largely be due to reduction in the prices of food items and fuel.
He said the foreign exchange market has remained stable due to low current account deficit due to lower oil imports, improved earnings from tea and horticulture exports, and strong diaspora remittances. “The current account deficit was estimated at 6.8 percent of GDP in 2015, a reduction of 3 percentage points from 2014, and is expected to narrow further in 2016,” he said.
Dr Njoroge said foreign exchange reserves stand at $7,688.3 million (equivalent to 5.0 months of import cover) up from $7,377.2 million (equivalent to 4.7 months of import cover) at the end of March 2016. “These reserves, together with the precautionary arrangements with the will continue to provide adequate buffers against short-term shocks,” he said.
Dr Njoroge said the dwarfed economic growth across the world - 3 per cent will mainly be due to slower growth in China, timing of US Fed’s next increase of interest rates and the outcome of the Brexit referendum.
Jack is a business and society writer at the Kenya Free Press