NCBA projects GDP to drop to 2.3% this year due to coronavirus

NCBA Bank is projecting the country’s Gross Domestic Product (GDP) to decelerate sharply to 2.3% in 2020.

This is if the COVID-19 pandemic persists through the second quarter of this year.

This is a sharp downgrade from its 5.7% projection in January 2020 prior to the outbreak of COVID-19 in the country.

The bank, in its quarterly economic outlook titled ‘Navigating COVID-19’ projects the budget deficit to widen to Ksh.1.118 trillion, about 10.4% of GDP should government maintain the Ksh.2.748 Trillion expenditure.

NCBA analysts are also projecting a bias towards domestic financing due to limited financing options for government.

“Protecting the health of the public continues to take precedence at this point with the contingency measures that are in place to contain the virus will add to the economic vulnerabilities. Additional restrictions to personal mobility including self-distancing and quarantine will impact the economy further,” NCBA Group Managing Director John Gachora said:

Betty Maina, CS Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development said: “The priority for Government during the Covid-19 pandemic is to support businesses in essential services to continue production and to address reduction in consumption.”

CS Maina added: “What is clear is that we need to prepare for new business delivery models post covid19. This disease has opened up new opportunity for SMEs to actively participate in sectors such as pharmaceuticals, logistics, ICT and processed foods space which are expected to emerge stronger post COVID-19.

“There is an urgent need for private sector to work much more closely with government to prepare for life during and after COVID-19.”