Kenya says global economic recovery to spur growth in East Africa
Staff Writer |
East African economies are expected to benefit from ongoing global economic recovery partly enabling them to ease effects of local shocks like drought and political uncertainty, a senior apex bank official said.
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Patrick Njoroge, the Governor of the Central Bank of Kenya (CBK) said the global economy will grow by 3.6 percent this year, an improvement from 3.1 in 2016, benefiting East Africa which largely exports agriculture commodities and minerals.
"The growth of 3.6 percent is quite significant because at 3 percent growth, the world economy is deemed to have stalled," he said.
This growth has partly helped countries like Kenya to be resilient in 2017 despite what the governor termed as 14 major shocks that have hit the country, most significant being the drought, the repeat presidential elections and capping of the interest rates.
"Lower inflation, a stable foreign exchange market, and stable interest rates are among other factors that made the country not experience severe economic shocks.
"It has been stability
n the face of shocks," he said.
Njoroge forecast that the economy will grow by 5.1 percent this year and recover better in 2018.
"This kind of growth is a pretty decent outcome compared to the fact that Africa is on average growing at 2.6 percent," the governor said at a forum in Nairobi that met to review the country's growth prospects.
He said stability in the foreign exchange market is expected to remain stable because the country has enough foreign exchange reserves.
The CBK governor said with end of the many shocks, the country's economy is set for a major rebound because of several factors among them the nature of the country's highly diversified economy which means a low growth of say agriculture sector s supplemented by better performance of the services sector.
Kenya, he said, also has diversified trading partners with 40 percent of the country's export value being within sub-Sahara Africa.
"Kenya also enjoys a dynamic private sector which is led by micro, small and medium enterprises. What we usually call 'hustling' as a cliche for informal businesses is actually what drives our economy," Njoroge said.
He added that the Standard Gauge Railway (SGR) has halved the cost of transporting goods from the Port Mombasa to Nairobi and has also halved the time of transporting such goods.
"We are talking about offloading cargo from the ship in the morning and having the goods in the warehouse in Nairobi in the evening.
"Before, this used to take a minimum of two days or longer. This will increase our competitiveness for both exports and imports," he said. ■
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