Kenyan central banker sees silver lining in economic gloom

Kenya’s economy could fare better than expected in the face of the coronavirus crisis, thanks to growing farm exports and a recovery in remittances, the central bank governor said on Friday.

The economy has been battered by the coronavirus, with tourism and small and medium-size businesses hit particularly hard.

But tea exports, a key source of hard currency, rose 15 per cent in May from May a year ago, the central bank governor, Patrick Njoroge, told an online news conference. Exports of flowers, fruits and vegetables grew by a third the same month.

“The expectation that we were going to sink so much further has not been borne by the numbers or the reality,” Njoroge said, although he cautioned that the outlook remained uncertain.

“We do not want to be so foolish as to say the worst is behind us,” Njoroge said, adding that the bank will review its economic growth forecast in the next two weeks.

Commercial banks have restructured loans worth Sh679.6 billion ($6.39 billion), nearly a quarter of the industry total, the central bank said, underlining the extent of the damage to the economy.

Policymakers left interest rates unchanged on Thursday for the second time in two months, after cutting them in March and April after the first case of COVID-19 was confirmed.

The current account deficit could narrow from the forecast of 5.8 per cent of gross domestic product for this year, Njoroge said.

Remittances — cash sent home by Kenyans living abroad — recovered to $258 million in May, he said, from $208 million in April. He said they were boosted by recoveries in major economies abroad and by more ways to send cash, including straight to the recipients’ mobile phones.