Kenya Economic Outlook
- Real GDP growth increased to an estimated 6.0% in 2016, up from 5.6% in 2015, with the expansion projected to continue in 2017 and 2018, supported by large investments and growth in the service sector.
- A stable macroeconomic environment with single-digit inflation (averaging 6% in 2016) prevailed as political campaigning for the August 2017 general elections got underway.
- Kenya has sophisticated entrepreneurship by regional standards but could increase its global footprint through increased investments in information technology.
GDP growth improved to 6.0% in 2016, up from 5.6% in 2015, driven by construction, manufacturing, finance and insurance, information and communication technology (ICT), and wholesale and retail trade. The outlook is positive, with growth projected at 6.1% in 2017 and 6.5% in 2018. Consumer Price Index (CPI) inflation projections remain slightly above 5% over the same period. Projections for the short to medium term are based on the following assumptions: increased rainfall to enhance agricultural production; a stable macroeconomic environment; continued low international oil prices; continued stability of the Kenya shilling (KES); improved security as a boost to tourism; and continued reforms in governance and justice.
Political activity in 2016 was marked by campaigning for the August 2017 general elections. Two coalitions emerged, one centered around the ruling Jubilee Party and the other around the main opposition grouping, the National Super Alliance (NASA). The opposition parties led a spirited campaign calling for overhaul of the electoral infrastructure. As a result, electoral legislation was amended to provide for a revised voter register and new electoral timelines and funding arrangements. All commissioners on the Independent Electoral and Boundaries Commission were replaced in January 2017.
Kenya has sophisticated entrepreneurship by regional standards but could increase its global footprint through increased investments in information technology (IT). The country aims to have a robust, diversified and competitive manufacturing sector to help its transformation into an industrialised middle-income economy by 2030. The overall goal for the industrial sector is to increase its contribution to GDP by at least 10% per annum and propel the country towards becoming Africa’s industrial hub.