Govt forecasts economic growth of 6.3 pct in 2016
03 February 2016, 08:11
Nairobi - The government has forecast Gross Domestic Product (GDP) to grow at 5.9 percent in 2015/2016, 6.3 percent in 2016/2017 and 6.4 percent by 2018/2019.
The Treasury said this robust broad-based growth will be supported by increased production in agriculture, completion of infrastructural projects to boost economic activity while continuing with other infrastructural investment projects and recovery of tourism.
"The economy will also benefit from increased investments and domestic demand, following enhanced investor confidence and the on-going initiatives to deepen regional integration," the Treasury said in the latest Budget Policy Statement received on Tuesday.
According to the statement, the economic growth remained resilient in 2015 with the first three quarters recording an average of 5.5 percent growth compared to 5.3 percent growth in a similar period in 2014.
The economic growth prospects for 2016/17 financial year and the medium term takes into account developments in the global environment and internal risks while accommodating the government's national strategic objectives as outlined in the second Medium Term Plan (MTP) for the period 2013-2017 of Vision 2030 and the broad development policies of the government.
According to the Treasury, the economy in the third quarter of 2015 grew by 5.8 percent, an improvement from a growth of 5.0 percent and 5.6 percent in quarter one and two of 2015 respectively.
Read Also: E. African states to install single electronic cargo system
The budget statement noted that accommodation and restaurant sector improved during the third quarter of 2015 with a contraction of 2.3 percent from a contraction of 16.0 percent during the same period 2014. This improvement is as a result of the withdrawal of the travel advisories by some key tourist source countries.
"The projected growth assumes normal weather pattern in 2016 and the medium term. Inflation is expected to revert within 5.0 percent target and interest rates and shilling exchange rate expected to be stable," the Treasury said.
It noted that the risks to the economic outlook for 2016/17 and the medium-term include continued uneven and sluggish growth in advanced economies that will impact negatively on our exports and tourism activities.
The budget statement said public expenditure pressures, especially recurrent expenditures, continue to pose fiscal risk to the National and County Governments.
"The government will undertake appropriate measures to safeguard macroeconomic stability should these risks materialize," the statement said.
The Treasury said the government has instituted various measures aimed at aligning the expenditures with the revised resource envelope.
"These include measures to curb non priority expenditures and to free resources for more productive purposes as well as expenditures cuts on slow and delayed projects," it said.
In November 2015, the International Monetary Fund (IMF) lowered Kenya's 2016 economic growth projection.
The multi-lateral lender has trimmed the country's projection down to 6.8 percent, from the initial 7.2 percent, owing to the prevailing harsh economic conditions.
The IMF also in September last year revised downwards Kenya's 2015 economic growth projection from 6.9 percent to 6 percent, citing the depreciating shilling and the suffering tourism sector.
For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page!