How CEOs in Kenya perceive economic recovery path in 2021
The Monetary Policy Committee (MPC) conducted a survey through the eye of Chief Executive Officers (CEOs) in Kenya who perceived an increased optimism for the country’s growth path compared to the May 2021 level.
The new survey released by the Central Bank of Kenya (CBK) managed-MPC shows business activity indicators for the third quarter of 2021 had respondents reporting mixed performance of demand and growth in sales with the firms continuing to be optimistic about business activity indicators for the fourth quarter. This is unlike the second quarter of the year.
“The firms continue to be optimistic about business activity indicators for the fourth quarter, with expectations of an increase in demand/orders, production volumes, sales growth, and prices of goods/services purchased, “said the report.
CEOs had the view that the increase in vaccinations, increased economic activity and Government investment in infrastructure portend increased opportunities.
This even as the bosses expressed fear that business activity in the third quarter was likely to be impacted by higher inflation.
The business leaders indicated that improved efficiency and innovation, increased marketing and better branding as well as improvement of product portfolio and development of new products were key internal factors that could strengthen the outlook for their firms.
An enabling business environment, a stable economic environment and containment of the COVID-19 pandemic were the external factors that could strengthen their firms’ outlook over the next 12 months.
The survey complements the Private Sector Market Perceptions Survey and Survey of Hotels conducted by the MPC.
The surveys are conducted every two months prior to MPC meetings.
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The objective of the Survey is to capture information on top firms’ perceptions, expectations and decisions.
It is revealed that business confidence in the Kenyan economy, compared to the growth for the other indicators was mixed.
While 45 percent of respondends expected higher growth, 29 percent of the business leaders expected a lower growth noting concerns with regard to the tourism sector, increasing political activity which could delay major investment decisions, and increased taxation.
Respondents noted that growth would be contingent on the government continuing to provide an enabling environment.
Meanwhile, optimism in the country’s economic prospects remained high, supported by the Market Perceptions Survey conducted in the first three weeks of the month.
There was increased economic activity in July-August (relative to May-June) with sustained recovery across the economic sectors.
However, top bosses were concerned about increased oil prices and taxation leading to high cost of goods and services.
The Market Perception survey found that respondents expected inflation to rise in the next two months, but to remain within the target range.
They also expected employment levels to remain moderate with a tendency to rise with increased activity in 2021 relative to 2020.
The Survey obtained perceptions of banks and non-bank private sector firms on selected economic indicators including inflation, economic growth, demand for credit, growth in credit to private sector and exchange rate.