Kenya’s economic growth gloomy as inflation rises

Kenya’s economic growth hangs in the balance as the country battles rising inflation, tightening fiscal and monetary space.

Ken Gichinga Chief Economist at Mentoria Economics says treasury should lift the public capital expenditure freeze to stimulate money circulation.

The Kenyan economy expanded by 6.3 percent in 2018 according to the Kenya National Bureau of Statistics.

This has prodded the national treasury to upscale its projection to 6.5 percent this year on the back of improved rainfall and better macro-economic prospects.

However, a lot seems to be going against this projection. Already the government has embarked on a major fiscal tightening by freezing capital expenditure on new projects while limiting capital expenditure to only ongoing projects.

Gichinga says the government should lift the freeze and review the interest rates cap law to stimulate lending to the private sector and boost money supply.

According to the Kenya National Bureau of Statistics quarterly growth report, the economy in the January to March period expanded by 5.6 percent from 6.5 percent a year earlier highlighting a difficult economic environment.

Gichinga says the growth is further compounded by slow credit uptake and the weakening of the Kenya shilling.

Three companies have so far announced plans to lay off staff casting doubts on Kenya’s economic health.

But Gichinga says, the government can wiggle out of this hair rising environment by implementing various measures.

  

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