Treasury Secretary Henry Rotich
Nairobi: Kenya will cut its growth forecast to reflect the impact of a drought that slashed agricultural output in East Africa’s biggest economy and left the country short of its staple food, Treasury Secretary Henry Rotich said.
Economic growth will probably be 5.7 percent this year, compared with an earlier estimate of 5.9 percent to 6 percent, Rotich said. The forecast may be reduced further to 5.5 percent once an assessment of the March-May rains is completed.
“We are analysing some leading economic indicators to see if this drought has gone beyond quarter one. If that is the case, we may adjust our numbers a bit lower,” said Rotich.
Kenya is experiencing its worst drought in more than three decades. The dry weather cut production of corn, reducing the country’s strategic grain reserve to less than a day’s supply, and resulted in shortages of products including sugar and milk.
Beyond agriculture, the momentum in the economy is “still strong,” Rotich said, citing the building of a standard-gauge railway linking the port of Mombasa to neighboring Uganda.
That’s underpinning growth of the construction industry, he said, while tourism, one of the country’s biggest generators of foreign exchange, is also “picking up.”
Cutting its forecast will bring the Treasury’s estimates more in line with the World Bank and the International Monetary Fund, which have cut their predictions to 5.5 percent and 5.3 percent respectively. Both organisations have cited the drought as a factor in lowering their forecasts, as well as the slowdown in lending by banks to the private sector.
