Cytonn Investments projects 5.4pc economic growth

Written By: Carol Njenga
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Cytonn Investments projects that the economy will this year grow by 5.4 per cent up 50 basis points from last year’s figure.

The company says this year’s GDP expansion will be supported by a recovery of the agriculture sector and tourism as well as strong growth in the manufacturing and construction sectors.

Cytonn Investments says slowed private sector credit growth as a result of a cap on interest rates could be the biggest hurdle towards a higher economic growth this year.

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Economic analysts have projected that the Kenyan economy is this year likely to expand between 4.6 and 6.2 percent.

Barclays Bank of Kenya projected a 5.5 percent economic growth, Stanbic Bank had 5.6 percent projection while Standard Chartered Bank gave the lowest projection of 4.6 percent.

The Central Bank Governor Dr. Patrick Njoroge has so far given the highest GDP projection of 6.2 percent.

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Cytonn Investments says the projection is driven by reduced political activity, recovery of the agriculture sector, increased government expenditure and the growth of key sectors such as manufacturing, construction, tourism and real estate.

However, Cytonn Investments says private sector credit growth, which averaged 2.4 percent in the 10-months to October 2017, compared to a 5-year average of 14.4 per cent, is expected to remain low this year due to capping of interest rates and the coming into force of the IFRS9 reporting standards. They say this is likely to hurt economic activity.

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Cytonn Investments projects the Sub-Saharan Africa economy to expand 3.4 percent this year supported by agriculture and high oil prices.

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