INTERNATIONAL - Kenya's economy should rebound in 2018 after drought and political turmoil during a prolonged election cycle cut nearly 1percent from this year’s early economic growth forecast, Finance Minister Henry Rotich said on Tuesday.
The economy is expected to grow by more than 6percent next year, Rotich said. Growth would move towards 7percent in the medium term, he added without elaborating.
He had earlier trimmed the 2017 forecast to 5percent from a previous projection of 5.5percent, which itself was a reduction from 5.9percent. The economy grew 5percent in the first half of the year, the government said, falling short of its full-year forecast.
“Agriculture this year will be better than last year, that is the reason why our growth looks optimistic, even at this time when we face these challenges on the investment side,” Rotich told a news conference.
Rotich said that revenue collections for the first four months of the 2017/18 (July-June) fiscal year had fallen short by 40 billion shillings (R5,47billion).
Kenya’s economy has faced a slowdown for most of the year. In addition to the drought and its political uncertainty, credit growth has slowed, partly because of a cap on commercial bank lending rates imposed last September. Rotich said the government had no immediate plans to lift the cap, saying it was still studying its effects.
The government planned to forge ahead with its infrastructure plans, he said, including a port at Lamu to ease regional trade.