President Kenyatta: Economy doing far better than anticipated in spite of COVID-19

President Uhuru Kenyatta now says the economy is performing far much better than anticipated in spite of a general slump triggered by the COVID-19 pandemic.

While speaking to the country in a televised address on Wednesday, President Kenyatta said current economic indicators have been impressive against the observed hiccups on activity.

“Reviewing the results today, I must admit that we have done better than we expected.  For instance, even under COVID, the economy has grown by 4.6% compared to 5.5% last year. Inflation is lower today at 4.4% compared to 6.3% during the same period last year; the current economic indicators are far better than we anticipated,” he said.

The resilience witnessed in the country’s economic turnout is partly attributable to the relaxation of COVID-19 restriction measures which have allowed the resumption of activity.

For instance, the government ended the ban on inter-county travel in and out of the counties of Nairobi, Mombasa and Mandera on July 6 while paving way for the resumption of domestic and international flights on July 15 and August 1 respectively.

Private Sector Activity has subsequently seen a significant improvement in activity with the Stanbic Bank Purchasing Managers Index (PMI) marking its first positive change in seven months in July.

The index moved on the right side of 50 points for the first time since November 2019 to 54.2 points from 46.6 points in June.

“Notably the removal of county travel restrictions supported output and business sentiment in July. This enabled firms to receive inputs much quicker, as supplier delivery times improved,” noted Stanbic Bank regional economist for East Africa Jibran Qureishi on August 5.

The President’s sentiments echo those of the National Treasury and the Central Bank of Kenya (CBK) with the pair of fiscal and monetary agencies having retained their annual Gross Domestic Product (GDP) outlook in the range of 2.3-2.6 per cent.

For instance, while addressing a National Assembly retreat on Wednesday, Treasury Cabinet Secretary Ukur Yatani said he expected the country’s economy to expand at 2.6 per cent this year

‘You cannot eat GDP’

The optimistic growth figures have however been contradicted by the contrary projections by the World Bank and the International Monetary Fund (IMF).

The IMF for instance recently predicted Kenya’s first recession since 1992 putting growth at 0.3 per cent while the World Bank put Kenya’s growth upside at 1.5 per cent at best.

CBK Governor Patrick Njoroge however recently differed with the projections insisting it has retained integrity in its own outlook of the local economy.

Njoroge, who previously said that one cannot eat GDP, has however warned that the worst is not over referencing personal hardships on individuals and small and medium enterprises in the country.

“We do not want to be bullish, I would even say it’s foolish to say the worst is behind us. We need to be cautious. At the end of the day, it’s not GDP that matters,” he said on June 26.

“For SMEs, it would be hard to say that the worst is behind them. You go down the bypass and find lawyers and accountants in these hustling environment where they are now selling vegetables.”

The true picture of the economic turnout is expected to come into clear view when the Kenya National Bureau of Statistics (KNBS) publishes its unemployment data for the second quarter om August 31 and the Q2 GDP print at the end of September.

Growth in the first quarter of 2020 tumbled to 4.9 per cent, the lowest since mid 2017 with the economy taking a battering even before the full blow of COVID-19 in the country.