In-Depth Analysis
Kenya
Following a commendable growth performance of late, the sudden economic and financial stops due to Covid-19 have derailed East Africa’s most sophisticated economy. The fiscal measures enacted to mitigate the socio-economic impact of the virus will exacerbate the country’s precarious fiscal and public debt positions. The outlook remains positive, supported by a diversified economic base, strong manufacturing sector, and a relatively skilled workforce.
Real GDP contracted by 5.7% y-o-y in Q2 2020 compared to a 4.9% y-o-y expansion the previous quarter, as Covid-19 containment measures and disruptions halted economic activity. Despite the easing of strict lockdown measures in Kenya, as well as the monetary and fiscal stimuli unleashed by the authorities, we forecast the economy to contract by 1.0% this year. Below-potential domestic demand, together with lower food and energy prices compared to last year, should help contain consumer price inflation within the central bank’s target range, but the fiscal shortfall is expected to widen sharply to 9.7% of GDP this year from 7.4% of GDP in 2019. (Source: Kenya Annual Country Profile, published November 2020.)
Macroeconomic Data
(2019)
|
Fiscal Balance (as a % of GDP) |
-7.4 |
|
Consumer Price Index (% change y-o-y, avg) |
5.9 |
|
Current Account Balance (as a % of GDP) |
-5.5 |
|
Real GDP (annual % change) |
5.4 |
|
GDP per Capita, US$ |
1,819.1 |
|
Import Cover (months) |
5.3 |
|
Population, million |
52.6 |
| Total External Debt (as a % of GDP) |
37.3 |