Kenya’s economy to grow at a faster rate this year and next – central bank

Central Bank of Kenya Governor Patrick Njoroge speaks during a press conference at the Central Bank of Kenya (CBK) headquarters in Nairobi, Kenya on July 25, 2019. REUTERS // File Photo

NAIROBI, Nov. 30 (Reuters) – Kenya’s economy is expected to rebound more strongly this year and next than initially thought, the central bank chairman said on Tuesday, buoyed by faster growth in sectors like transport and industry.

The economy, which is the largest in East Africa, is expected to grow 6.4% in 2021 and 6.0% next year, Patrick Njoroge said at a press conference. The forecasts are higher than the growth of 6.1% for this year and 5.6% in 2022, given by the bank in September.

“The recovery has accelerated,” Njoroge said, warning that the latest forecast did not take into account the emergence of the new Omicron variant of the coronavirus.

Like other economies around the world, Kenya has been hit by the coronavirus-induced crisis as restrictions imposed to tackle the pandemic have reduced incomes and stifled growth.

The recovery has started this year, but the pace could be slowed by a shortage of COVID-19 vaccines and waves of infections driven by the emergence of new variants.

The faster expected growth will also be supported by a recovery in the key tourism sector, which was one of the hardest hit by the pandemic last year, Njoroge said.

Policymakers kept the central bank’s key rate at 7.0% for the 11th meeting in a row on Monday, citing a drop in the inflation rate last month and evidence that the dovish stance was benefiting the economy. Read more

Money sent home by Kenyans living abroad, a major source of foreign exchange, was set for another record year, Njoroge said.

In September, the central bank forecast liquidity, known as remittances, to reach about $ 3.4 billion this year, from $ 3.09 billion in 2020.

The central bank has not changed its exchange rate policy, the governor said, despite the shilling falling to its lowest level against the dollar in recent weeks.

“We allow the market to push the exchange rate, strengthen it, weaken it as long as there is no volatility,” Njoroge said.

Reporting by George Obulutsa; Editing by Duncan Miriri and Ed Osmond

Our standards: Thomson Reuters Trust Principles.