World Bank lifts Kenya’s 2022 growth forecast

The World Bank Group projects Kenya’s GDP to grow by 5.5 per cent this year down from an earlier projection of 4.9 per cent in December.

The moderate growth expectation is nevertheless expected to come in lower than the 7.5 per cent expansion rate posted last year on the back of a strong bounce-back from the COVID-19 pandemic.

The fallout from the Russia-Ukraine war is set to offset the strong economic momentum registered in the past year.

The subsequent high commodity prices off the external shocks are seen increasing import costs for Kenya while slowing global growth is expected to soften the demand for Kenyan exports.

According to the report published Tuesday, the impact of the Russia-Ukraine conflict is expected to subtract up to 50 basis points from Kenya’s growth this year, and a further 30 basis points in 2023.

“Notwithstanding the more adverse external economic environment, the growth projection for 2022 has still been upgraded to take into account the stronger than expected recovery in 2021, feeding through to the annual growth comparison in 2022,” noted the World Bank.

The World Bank expects growth to moderate to five per cent in 2023 before rising again to 5.3 per cent in 2023.

The broader services sector is expected to provide the momentum for growth at 7.4 per cent with manufacturing and agriculture set to trail with lower growth rates of 3.4 and 1.3 per cent respectively.

The country’s current account deficit is meanwhile estimated at a wider six per cent of GDP from a 5.5 per cent estimate in 2021 on costlier import costs in the year.

Meanwhile, the World Bank expects the rate of inflation to stick below the government’s ceiling of 7.5 per cent at a flat seven per cent at year’s end.

The country’s fiscal deficit is seen falling marginally to 8.1 from 8.2 per cent while the ratio of debt to GDP is expected to see a slight uptick to 68 per cent from 67.8 per cent at the end of last year.