KIPPRA trims this year GDP growth to 5.4pc on election risks

KIPRRA

The Kenya Institute for Public Policy Research and Analysis (KIPPRA) projects that the economy will expand 5.4% this year on account of rebound in services, manufacturing and agriculture sectors.

KIPPRA Executive Director Rose Ngugi says they have revised down the 2022 economic projection from an earlier figure of 6.3% due to drought and political uncertainties that are likely to affect investments.

KIPPRA says easing of restrictions in key tourism source markets is likely to lift tourism figures which in addition to other factors are expected to power economic growth this year.

However, high crude oil prices, drought experienced in parts of the country early this year coupled with heightening political activity ahead of the August general election, could economic activity.

In its Kenya Economic Report 2021, KIPPRA adds that the rising debt servicing costs is a risk in the medium-term as there are possibilities of reallocation of funds away from delivery of public service.

“High debt service obligation implies that the Government may face difficult trade-offs during the pandemic as to whether to honor debt obligation or spend domestically to contain and cushion the impact of the pandemic. Further, depreciation of the Kenya shilling has led to increase in debt service budget in local currency since 51% of the debt is held in external currency.”

Kenya’s debt currently stands at Kshs. 800 billion with the country expected to borrow at least Kshs. 600 billion in the current financial year to plug budget deficit.

According to the institute, the Government has spent Kshs. 522.1 billion in debt service between July 2020 and April 2021.

Due to global supply chain disruptions witnessed in recent months, Ngugi is calling for the enhancement of the local manufacturing production capacity to meet the huge demand.

This is further projected will likely hamper Kenyan exports and imports, slowing down trade and

production processes in the country.

KIPPRA says increased uptake of the Covid-19 vaccinations globally could positively influence the global economy.

  

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