Global firms up­grade Kenya’s 2016 growth

Twelve economic reasearch firms project the econ­omy could ex­pand by 6% this year, a slight 0.1% rise over last three months

The Star (Kenya) - - News - CON­STANT MUNDA @munda­con­stant

World’s lead­ing banks, con­sul­tan­cies and think-tanks have re­vised up the coun­try’s growth fore­cast this year for the first time in three months, cit­ing in­fra­struc­ture projects which are com­ing on board.

A con­sen­sus growth out­look from the 12 global firms shows the coun­try’s econ­omy is likely to ex­pand by six per cent this year, a slight 0.1 per­cent­age point up­grade over the last three months. This mir­rors In­ter­na­tional Mon­e­tary Fund’s pro­jec­tion in April, while the World Bank stuck to 5.9 per cent fore­cast in June.

The firms are JPMor­gan of the US ( 6.1 per cent), HSBC of UK ( 5.7 per cent), Stan­dard Char­tered Bank ( 5.8 per cent), Bar­clays Cap­i­tal ( 5.6 per cent) and New York-based bro­ker­age firm Cit­i­group Global Mar­kets ( 6.0 per cent).

Oth­ers are Fitch Rat­ings-owned BMI Re­search ( 6.5 per cent), con­sul­tancy firm Cap­i­tal Eco­nomics of UK ( 6.5 per cent), Wash­ing­ton- head­quar­tered Fron­tier Strat­egy ( 5.9 per cent), Economist In­tel­li­gence Unit ( 5.8 per cent) and credit in­sur­ance firm Euler Her­mes of France ( 6.0 per cent).

Ox­ford Eco­nomics, the Ox­ford Univer­sity’s economic fore­cast­ing arm, sees Kenya grow­ing by 5.6 per cent while Euromon­i­tor In­ter­na­tional, a Lon­don-head­quar­tered re­search firm, projects a six per cent growth.

“Growth is be­ing sus­tained by sev­eral in­fra­struc­ture projects, in­clud­ing a new con­tainer ter­mi­nal at the Mom­basa port that is ex­pected to in­crease its cargo ca­pac­ity by 50 per cent, which is also cru­cial for Kenya’s plan to be­come an oil pro­ducer and ex­porter in 2017,” re­searchers at Fo­cusE­co­nomics, a Barcelona-based economic anal­y­sis firm, said in the re­port last week. “In­creased tea out­put in the first half, cou­pled with the on­go­ing re­cov­ery in the tourism sec­tor is sup­port­ing ex­ports and for­eign re­serves.”

Cap­ping of in­ter­est rates at four per­cent­age points above the 10 per cent Cen­tral Bank Rate has, how­ever, raised con­cerns of “riskier” firms and house­holds be­ing locked out of credit mar­ket, slow­ing growth in the medium term.

“The law will nev­er­the­less sup­port the ac­tiv­ity of con­sumers and firms that re­main el­i­gi­ble for loans in the for­mal mar­ket since it will make pri­vate sec­tor credit cheaper for them,” Fo­cusE­co­nomics an­a­lyst Teresa Ker­st­ing told the Star via email. “On bal­ance, how­ever, the ad­verse im­pact of the dry­ing-up of credit to riskier mar­ket seg­ments will likely pre­vail.”

Credit to the pri­vate sec­tor rose by a dis­mal 8.6 per cent in June year-onyear, much slower than the CBK’s tar­get of 15.3 per cent, and slowed fur­ther to 7.07 per cent in July.

“We need to go and in­ves­ti­gate and see who ac­tu­ally has done what,” Cen­tral Bank gover­nor Pa­trick Njoroge said last Wed­nes­day. “We be­gan to see this trend since June when it be­came much clearer al­though there was some sort of de­vi­a­tion ear­lier in the year.”


Cen­tral Bank gover­nor Pa­trick Njoroge at the quar­terly re­view brief­ing in Nairobi on Wed­nes­day

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