Global economists have further trimmed Kenya’s growth outlook for 2022, largely citing reduced expenditure on infrastructure projects amid rising external debt costs and price pressures from Russian war on Ukraine.
A consensus growth outlook from 14 world-leading banks, consultancies and think tanks shows economic activity will likely expand 5.1 percent this year, a drop of 0.3 percentage points from 5.4 percent at the beginning of the year.
“The outlook is clouded by the country’s reliance on foreign capital for infrastructure and a rise in external debt,” analysts at Barcelona-based FocusEconomics wrote in their April outlook report on Kenya.
The analysts who noted a “markedly softer” growth in private sector activity in January as measured by Stanbic Bank Kenya’s Purchasing Managers Index (PMI) argue that “climbing commodity prices following Russia’s invasion of Ukraine will … limit production” for private firms.
Kenya’s growth will, however, remain relatively robust, growing above projected 3.5 percent for sub-Saharan Africa.
“Economic growth is set to be moderate this year, but remain healthy nonetheless. Household and capital spending should firm as economic conditions normalise,” FocusEconomics, which compiled the outlook report between March 15 and 20, wrote.