Bank sees 5.5pc growth for Kenya

By JAMES ANYANZWA

Citigroup expects Kenya’s economy to grow by 5.5 per cent this year helped by strong growth in the agricultural and services sector.

The US- based financial conglomerate also predicts that the country could be racing towards the strong growth experienced during former President Mwai Kibaki’s first term  (2003-2007) in office.

Mr David Cowan, the group’s Senior Economist in-charge of African operations said the recent terrorist attack on Westgate Shopping Mall was merely a blip whose impact might only be limited to slowing down the rapid recovery of the tourism industry. He noted that the strong economic outlook for the East African Community (EAC) would help support the activities of many firms which have been slow to pick up investments after the March 4 general elections, and boost trade flows.

“Citi forecasts 5.5 per cent real gross domestic product (GDP) growth this year,” Cowan told The Standard in an emailed statement.

“Despite some setbacks, notably the recent terrorist attack, which will probably limit a very rapid recovery in the tourism industry, we still expect strong agricultural and service sector growth,” he added.

 According to Cowan strong EAC growth will continue to benefit local companies and encourage multinationals to use Nairobi as a regional hub. He said the real issue going forward is all about confidence and whether business would develop more confidence in the economic outlook to push ahead with new investment.

“Can the government improve the business environment while reducing the fiscal deficit? Can devolution be achieved which will be positive for overall growth?” Cowan posed.

New boom

“On balance, we are positive about this. And as we have argued, Kenya could be entering a new boom similar to the strong growth spurt seen in 2003-07,” he added.

He notes that the development of the manufacturing, service and agricultural sectors is crucial for employment creation. Cowan observed thatKenya still remains quite dependent on tourism and agriculture.