Kenya’s economy is projected to grow at 5.9% in 2016, recording an improvement over the 5.6% estimated for 2015, says a new World Bank Group economic report.
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The Gross Domestic Product (GDP) is expected to improve further to 6% in 2017.
The Kenya Economic Update (KEU): Kazi ni Kazi: Informality Should Not Be Normal attributes the positive outlook to low oil prices, good agriculture performance, supportive monetary policy, and ongoing infrastructure investments.
Kenya experienced strong economic performance in 2015, and has exceeded the average growth for Sub Saharan Africa countries consistently since 2009, the report adds.
The KEU reviews Kenya’s economic performance in the context of three global factors which have been discussed for some time, and are now in full force.
These include: industrialized countries’ monetary policy adjustment; the end of the commodity price boom, and the rebalancing of Chinese economy. The report says that the interaction between these global factors with domestic policy and conditions will determine Kenya’s growth in the near term.
According to the report, Kenya’s economy remains vulnerable to domestic risks that could moderate the growth prospects.
These include: first, the possibility that investors could defer investment decisions until after the elections; second, that election related expenditure could result to a cut back in infrastructure spending, and third, security remains a threat, not just in Kenya but globally.
Finally, changes in monetary policy in industrialized countries could trigger volatility in financial markets putting the currency under pressure.
The KEU, whose special focus is on jobs notes that Kenya is creating more jobs now, but mainly in the informal sector. In the next ten years, nine million youth will enter the labor market, a majority will continue to find jobs in the informal sector, the report adds.
To create more and better jobs, it is also imperative to reduce the cost of doing business which is necessary for a robust private sector, the report adds. ■