IMF trims Kenya’s 2021 growth outlook to 5.6%


IMF trims Kenya’s 2021 growth outlook to 5.6%
FILE PHOTO: The IMF headquarters building in Washington, U.S., captured on April 8, 2019. PHOTO / REUTERS / Yuri Gripas

In Summary

  • This according to IMF staff estimates which were published as part of the multi-lateral lender updated World Economic Outlook for the month of October which was published on Tuesday.
  • In previous projections, the IMF had seen the Kenyan economy rebounding at the rate of 7.6 per cent before cutting the outlook to 6.3 per cent.
  • Further, the IMF projects 2022 growth at six per cent.

The International Monetary Fund (IMF) has trimmed Kenya’s 2021 growth forecast for a third time to 5.6 per cent from 6.3 per cent previously.

This according to IMF staff estimates which were published as part of the multi-lateral lender updated World Economic Outlook for the month of October which was published on Tuesday.

In previous projections, the IMF had seen the Kenyan economy rebounding at the rate of 7.6 per cent before cutting the outlook to 6.3 per cent.

Further, the IMF projects 2022 growth at six per cent.

Similarly, the lender sees inflation holding steady within the government’s medium term target at six per cent from an average of 5.2 per cent in 2020 before easing further to five per cent next year.

Moreover, the IMF sees the current account deficit largely holding at five per cent of GDP, to rise moderately from 4.4 per cent of GDP in 2020 and settle at a higher 5.1 per cent in 2022.

The lower projection for Kenya however widely aligns to a lower global growth forecast with the world GDP expected to recover at a marginally slower rate of 5.9 per cent from six per cent in July.

The negligible downward adjustment is largely attributed to downgrades on low-income and developing economies which currently face worse off COVID-19 dynamics.

The IMF expects vaccine access to remain the principal driver of the global economic recovery.

The new projection by the IMF aligns largely with other updated outlooks including the World Bank which sees growth at five per cent, the Central Bank of Kenya (6.1%) and Treasury which now sees the 2021 rebound at the rate of at least six per cent.

The Kenyan economy contracted by 0.3 per cent last year, a first dip in nearly 30 years.

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