World Bank Forecasts Kenya’s 2012-2013 GDP Growth at 5%

On Monday, World Bank said that Kenya’s economy would grow at 5 per cent in 2012 and 2013. However, it remains vulnerable to both domestic and global shocks that may reduce it 4.1 per cent. The global lender also said that the country’s economy grew at 4.4 per cent last year.

The World Bank addressing reporters in Nairobi gave caution that Kenya needs to rebalance its economy, increase savings, and create more incentives for exports.

Other issues that were noted include; the political uncertainty before next year’s elections that may shun investors after the post election violence of 2007 and the current Europe Debt Crisis, which may affect tourist to the country and reduce demand for exports.

A drastic interest rate reduction may reverse foreign exchange inflows and cause currency volatility, according to the World Bank statement.

The current account deficit soared to 13.1 per cent of GDP last year and is expected to increase to 15 per cent according to World Bank forecasts. To cater for this government needs to promote manufacturing investments, remove regulatory and regional trade hurdles.

It also urged the government to introduce policies to control consumption-led growth and encourage savings and investment in the country.

Source: Bloomberg.com