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Apr. 28, 2017, 12:15 am | By CONSTANT MUNDA @mundaconstant
World’s leading banks, think-tanks and consultancies have joined the queue in downgrading the country’s growth outlook for 2017, citing slowdown in private sector credit and dampening business sentiment ahead of August polls.
A consensus growth projection from 12 global institutions shows the country’s economy is likely to expand by 5.4 per cent, a slower growth than 5.8 per cent last year.
The firms are JPMorgan of the US ( 4.9 per cent), HSBC of UK ( 5.0 per cent), Standard Chartered Bank ( 4.5 per cent), Barclays Capital ( 5.7 per cent) and New York-based brokerage firm Citigroup Global Markets ( 5.2 per cent).
Others are Fitch Ratings-owned BMI Research ( 5.6 per cent), consultancy firm Capital Economics of UK ( 5.5 per cent), Washington-headquartered Frontier Strategy ( 4.6 per cent), Economist Intelligence Unit ( 5.5 per cent) and credit insurance firm Euler Hermes of France ( 6.5 per cent).
Oxford Economics, the Oxford University’s economic forecasting arm, sees Kenya growing by 6.4 per cent while Euromonitor International, a London-headquartered research firm, projects a 5.6 per cent growth.
“GDP growth is expected to slow this year, as the interest rate cap continues to choke business investment,” economists at FocusEconomics, the Barcelona-based macroeconomic analysis firm, said in a consensus report. “In addition, political uncertainty around the August presidential election could dampen business sentiment.”
The analysts said last year’s growth of 5.8 per cent was largely supported by external sector. Import bill reduced due to low crude oil prices while exports continued to grow, though at a slower pace, denoting demand in foreign markets, they said.
“This offset weaker domestic demand, as both private and government consumption slowed and fixed investment swung to contraction, with the latter trend aggravated by the government’s decision to cap interest rates in September,” FocusEconomics said.
The powerful Bretton Woods institutions –the World Bank Group and the International Monetary Fund – have piled pressure on the government to scrap rate cap to spur domestic demand, which has traditionally supported growth.
“Although the adverse effects of the controls are manageable in the near term, if maintained, they could potentially pose a risk to financial stability,” IMF deputy managing director and acting chair Tao Zhang said in a statement on January 26.
More firms cut Kenya’s 2017 growth prospects
World’s leading banks, think-tanks and consultancies have joined the queue in downgrading the country’s growth outlook for 2017, citing slowdown in private sector credit and dampening business sentiment ahead of August polls.
A consensus growth projection from 12 global institutions shows the country’s economy is likely to expand by 5.4 per cent, a slower growth than 5.8 per cent last year.
The firms are JPMorgan of the US ( 4.9 per cent), HSBC of UK ( 5.0 per cent), Standard Chartered Bank ( 4.5 per cent), Barclays Capital ( 5.7 per cent) and New York-based brokerage firm Citigroup Global Markets ( 5.2 per cent).
Others are Fitch Ratings-owned BMI Research ( 5.6 per cent), consultancy firm Capital Economics of UK ( 5.5 per cent), Washington-headquartered Frontier Strategy ( 4.6 per cent), Economist Intelligence Unit ( 5.5 per cent) and credit insurance firm Euler Hermes of France ( 6.5 per cent).
Oxford Economics, the Oxford University’s economic forecasting arm, sees Kenya growing by 6.4 per cent while Euromonitor International, a London-headquartered research firm, projects a 5.6 per cent growth.
“GDP growth is expected to slow this year, as the interest rate cap continues to choke business investment,” economists at FocusEconomics, the Barcelona-based macroeconomic analysis firm, said in a consensus report. “In addition, political uncertainty around the August presidential election could dampen business sentiment.”
The analysts said last year’s growth of 5.8 per cent was largely supported by external sector. Import bill reduced due to low crude oil prices while exports continued to grow, though at a slower pace, denoting demand in foreign markets, they said.
“This offset weaker domestic demand, as both private and government consumption slowed and fixed investment swung to contraction, with the latter trend aggravated by the government’s decision to cap interest rates in September,” FocusEconomics said.
The powerful Bretton Woods institutions –the World Bank Group and the International Monetary Fund – have piled pressure on the government to scrap rate cap to spur domestic demand, which has traditionally supported growth.
“Although the adverse effects of the controls are manageable in the near term, if maintained, they could potentially pose a risk to financial stability,” IMF deputy managing director and acting chair Tao Zhang said in a statement on January 26.
More firms cut Kenya’s 2017 growth prospects
