Kenya

The economy was somewhat resilient in Q1 2020 – real GDP growth only eased to 5.0% y-o-y in Q1 2020 from 5.5% in Q4 2019. Nevertheless, due to the sharp decline in consumer spending and sudden economic stops caused by Covid-19, we now expect the economy to contract by 0.7% this year. This, however, is against our earlier forecast of a 2.0% contraction on account of emerging evidence of a faster near-term growth rebound as lockdown restrictions are gradually relaxed in Kenya and globally. Kenya's exports should be lower this year due to a reduction in global demand, though at the same time imports should fall notably due to a reduction in global oil prices and subdued industrial activity, while fiscal efforts to fight Covid-19 should widen the fiscal deficit. With FDI inflows expected to decline notably in 2020, Kenya will need to turn to external debt to fund its twin deficits. Meanwhile, the realignment taking place within Kenya's political landscape, along with the continuing fracturing of the ruling Jubilee Party, contributes to the main political risks over the short- to medium term. The political environment is set to remain unsettled with institutional development being undermined. (Source: Kenya Quarterly Update, published August 2020.)

Macroeconomic Data

(2019)