Terror attacks pose a threat to tourism
02 October 2013, 14:37
Nairobi - Rand Merchant Bank (RMB), the prominent financial services firm, forecasts the ongoing fears of terror will negatively affect the tourism sector and its contribution to the country's gross domestic product.
The projections are in contrast to recent forecasts by the country’s tourism sector would not have a major effect on the country’s economy.
In a report published on Wednesday, RMB nonetheless forecast the uncertainty that characterized the general election earlier this year and the ongoing terror problems would have an adverse impact.
“The hotels and restaurants sector experienced a contraction due to political uncertainty surrounding the presidential elections in March,” RMB stated.
The elections were held amid reports of vote rigging. However, the current uncertainty following the terror attack at the Westgate mall dwarfs those problems.
“An escalation in security concerns, following the recent attack on Westgate Mall, is likely to impair tourism, which contracted almost 30 percent after the United States embassy bombing in 1998, as well as elevate the cost of doing business,” RMB stated.
RMB, in its mid-year review, noted that persistent security disruptions could shift the balance of risks to the firm’s growth forecast downward.
“While we remain constructive on Kenya’s long term prospects, we are wary of the potential near-term implications of the attacks on economic output and as such have revised our year-end GDP growth forecast slightly lower to 5.2 percent."
Tourism is the second largest source of foreign exchange following agriculture.
– CAJ News