Kenya’s overall growth rate will stand at 5.5 per cent this year, suppressed by heightened political activity, says a new report.
Financial services firm Metropol in an economic outlook report, puts the growth below the target set by World Bank at 5.7 per cent.
While World Bank says growth will be supported by mega projects such as the Sh387.5 billion standard gauge railway and Sh2.2 trillion Lamu Port South Sudan Project, Metropol says that slow progress of the latter could slow down growth.
Metropol chief economist Ndiritu Muriithi says that actual construction of the pipeline which is a component of the Lapsset for instance is expected towards the end of 2016.
The 2017 growth rate will be at 6.5 per cent as most projects will be near completion.
Between 2018 to 2019, growth is expected to hit between 8 and 10 per cent.
In the meantime, deteriorating dispute resolution mechanisms at the Judiciary will be a slight impediment to the shine in foreign direct investments.
“Dispute resolution has deteriorated with the number of pending cases in the High Court increasing from a low of 42,000 in year 2010 to a high of 158,216 in 2014,” said the report.
“This contributes to a perception of worsening of investment climate.”
REDUCTION IN CRIME
Metropol expects reduction in crime to shore up economic prospects.
Reported crime declined in 2014 by four per cent to 69,376 from 71, 832 in 2013.
However, the financial firm notes that the general challenge of national security from terrorism has overshadowed that reduction in overall crime rates.
The price of crude oil is expected to fall below $40 per barrel throughout the year owing to the supply glut and reduced demand from major consumers such as China.
This will play a big role in easing the strain on the country’s trade balance.
“We expect it to narrow since oil prices remain low, thus cutting down our import bill. Growth expectations among our leading trading partners in the East African Community and the Common Market for East and Southern Africa (Comesa) are also high, meaning that they will buy more from us this year and thus improve our trade balance,” said Mr Muriithi.