Kenyas economy to drop to lowest rate since 2009 over coronavirus

The National Treasury has projected that the country’s economic growth rate will drop to 3.6 per cent from the 6.1% percent projected at the start of the year.

Addressing the press on Monday, Labour Cabinet Secretary Simon Chelugui said documents from the Treasury show the coronavirus epidemic will hit hard on Tourism, Manufacturing, Agricultural, Transport, wholesale and retail sectors.

“What is ahead of us is real, our economy will not be the same and tourism which has climbed for the last two years in terms of forex contribution is equally going to be affected,” said the CS.

“Certain groups will be dis-proportionally hit as tourist and remittance source countries in Europe, the Gulf and Europe face a similar slowdown,” said CS Chelugui.

The Kenyan economy last slowed to a timid 3.3 per cent growth rate in 2009 on the back of shocks emanating from the then prevailing global financial crisis.

The Labour CS further warned that job cuts are imminent as the majority of businesses struggle to stay afloat amidst widespread disruption to economic activity.

In spite of the gloomy outlook, the Labour CS says the government is prioritizing the safeguarding of jobs as both layoffs and pay cuts loom as enterprises struggle to keep doors open.

“Job cuts are imminent. What we have done as a ministry is to call all stakeholders and try mitigate the pain,” he added.

According to the International Labour Organisation (ILO), the resulting Covid-19 outbreak is expected to result in the layoff of an estimated 25 million people across the globe with Kenya being hardly spared from the decimation.

The Ministry remains engaged with industry players including the Federation of Kenyan Employers (FKE) and the Central Organisation of Trade Unions (COTU) on what Chelugui terms as ‘practical suggestions’ to the looming crisis in the aftermath of the coronavirus containment.

Nevertheless optimism remains on a high against the rocking economic shocks.

“Tough times don’t last but tough people do,” CS Chelugui said.