World Bank forecasts Kenya’s GDP to decelerate to 5.0% in ’24

Kenya’s real GDP rose to 5.6 per cent in 2023 from 4.9 per cent in the previous year, fueled by agriculture and services, however, the World Bank forecasts a slowdown to 5.0 per cent by 2024, according to its Kenya Economic Update (KEU) released on Wednesday.

The KEU attributes the slowdown to tight fiscal policies, high inflation, debt obligations, and currency depreciation. Despite this challenging environment, the report said Kenya’s economic growth demonstrated resilience and accelerated, driven by the government’s strategic policy measures that have bolstered overall macroeconomic stability. The Kenyan government successfully conducted a partial Eurobond buyback in February 2024 aimed to stabilise liquidity and restore market confidence. The “move that significantly eased the immediate liquidity constraints for the year, instilling a sense of calm in the markets,” said Keith Hansen, World Bank Country Director for Kenya.

“The improved macroeconomic conditions, and re-access to international financial markets, are anticipated to boost investor confidence and private investment.” Hansen added.

The KEU projects 5.2 per cent GDP growth for 2024-2026, dependent on favourable weather, industrial recovery, and policy continuity. Trade integration is key, given Kenya’s export potential.

Moreover, policy adjustments are needed to enhance competitiveness and diversify exports. While Kenya’s economy shows promise, overcoming challenges and seizing trade opportunities will be vital for sustained growth.