Kenya Economic Outlook

  • The economy experienced moderate growth of 4.4% in 2011 and 4.2% in 2012 and is expected to reach 4.5% in 2013 and 5.2% in 2014.
  • Having witnessed drastic currency depreciation and rapid inflation in 2011, the economy experienced stability for both indicators in 2012. This stability is expected to continue in 2013.
  • International Criminal Court (ICC) proceedings against six Kenyans dominated the political scene in 2011 and 2012 and are likely to continue as the cases against four of the six accused persons move to full trial in summer 2013. 

Two of the accused were cleared at the pre-trial stage due to a lack of evidence. Political activity in 2013 is dominated by preparations for, and the outcome of, the March 2013 election of a new president, 47 county governors, members of Parliament (senate and national assembly) and county assembly representatives.

Kenya’s economy continued to record slow growth in 2012, primarily driven by financial intermediation, tourism, construction and agriculture. The first half-year GDP growth rate in 2012 was an estimated 3.4 %, compared to an annual real GDP growth rate of 4.4% in 2011 and 5.8% in 2010. The estimated growth of 4.2% in 2012 was mainly curtailed by a slowdown in most economic sectors. Agriculture – the mainstay of Kenya’s economy – recorded suppressed activity (mainly in the industrial crops sub-sector) and was further affected by slowed demand for Kenyan horticultural exports in the European market. Similarly, the tourism, manufacturing and construction sectors did not reach the anticipated growth levels.

Real GDP growth is expected to increase to 4.5% in 2013 and 5.2% in 2014. Similarly, consumer price index inflation is expected to remain in the single-digit range over the same period. Regardless which coalition wins the elections, radical changes in economic governance are not expected, thereby guaranteeing the stability of economic fundamentals.

Political activity in 2011 and 2012 mainly centred on trials at the ICC and preparations for the March 2013 general elections. Six Kenyans were initially indicted by the ICC for crimes against humanity committed during the 2008 post-election crisis. Two were cleared in 2011 and the trials of the other four continue at The Hague. The March 2013 general election also saw intense competition between the two main coalitions  seeking the presidency, various gubernatorial and county representative seats and membership in Parliament. Overall, the 2012 Country Policy and Institutional Assessment (CPIA) findings mirrored the 2011 findings. The scores for macroeconomic policies; institutions for economic cooperation, regional integration and trade; business regulatory environment; environmental policies; efficiency of revenue mobilisation; quality of public administration; and transparency, accountability and corruption remained unchanged over two consecutive years. Little variation in other CPIA scores led to little change in the overall CPIA score.


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