Kenya economy improves
Kenya’s economic performance exhibited resilience, with the Gross Domestic Product (GDP) accelerating to approximately five percent, up from 4.8 percent in 2022, as reported in the latest Kenya Economic Update by the World Bank.
In 2023, Kenya’s economic performance exhibited resilience, with the Gross Domestic Product (GDP) accelerating to approximately five percent, up from 4.8 percent in 2022, as reported in the latest Kenya Economic Update by the World Bank. This growth occurred against the backdrop of a challenging macroeconomic environment throughout the year.
The World Bank attributes this positive momentum to a robust recovery in the agricultural sector, which had previously grappled with persistent and severe drought, and a moderate expansion in the services sector. The report highlights that the rebound in agriculture has not only enhanced food supply but, coupled with prudent monetary policy measures, has contributed to alleviating inflationary pressures.
Furthermore, the tourism sector continued its expansion, private sector credit improved, and expectations point to growth in the agro-processing sector, fostering positive developments in manufacturing activity.
Despite these encouraging indicators, the World Bank cautions that Kenya faces multiple challenges in sustaining its growth trajectory. Notable concerns include heightened fiscal and external vulnerabilities, characterized by high public debt, an elevated cost of living, exchange rate pressures, global economic uncertainties, and stringent global financial conditions.
Keith Hansen, the World Bank country director for Kenya, commended the government’s strategy of leveraging concessional borrowing to alleviate debt pressure, noting that it is a prudent approach to curbing the accumulation of expensive debt.
The report underscores the persistence of debt-related vulnerabilities and highlights that increasing debt costs constrain the government’s capacity to address development challenges. Despite these challenges, the country has made progress, with the reduction of the primary deficit from 1.6 percent of GDP in FY2021/22 to 0.8 percent of GDP in FY2022/23. The overall deficit also decreased from 6.2 to 5.6 percent during the same period and is expected to further reduce to 5.4 percent in FY2023/24, according to the World Bank.