The World Bank has maintained its growth projection for Kenya’s economy in 2024 at 5.2%, consistent with its earlier estimates ranging from 4.5% to 5.2% released in December 2023.
The outlook is attributed to the recovery in exports and the resilience of the service sector.
The latest Kenya Economic Update (KEU), a biannual report assessing Kenya’s economic and social developments, indicates that the growth outlook assumes adequate rainfall, adherence to the planned fiscal consolidation strategy, and the continuous implementation of the government’s structural reform agenda.
“Looking ahead, ongoing fiscal consolidation efforts, tight monetary policy, and fading tailwinds from the agricultural rebound are expected to slow down GDP growth to 5.0 percent in 2024,” the report states.
Agriculture remains the largest contributor to Kenya’s exports, followed by minerals and chemicals.
Despite these strengths, merchandise exports have seen minimal growth, and Kenya has introduced few new products with added value to its export basket.
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In 2023, Kenya’s macroeconomic performance was influenced by tight fiscal and monetary policies, inflation, and external liquidity challenges.
Remittance Inflow to Cement Groth Projection
“The 2023 growth rate surpasses the pre-pandemic average of 4.6% per year (2011-2019) and exceeds the potential GDP growth rate. Without the drought’s impact, real growth could have been closer to 5%, aligning with historical trends,” the report noted.
Remittance inflows are projected to remain resilient, further bolstering household incomes.
Throughout 2023, Kenya’s external sector faced challenging conditions both domestically and globally. While currency depreciation stimulated demand for exports, it was offset by a sluggish global economy and reduced global demand.
The depreciation also led to higher domestic prices, reducing local demand. The overall reduction in global and domestic demand, coupled with global macroeconomic tightening, narrowed the current account deficit.
