The 2019 Annual Meetings of the African Development Bank Group will be held from 11-14 June 2019, in Malabo, Republic of Equatorial Guinea. Find out more

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Regional Economic Outlook 2019 - East Africa
04/04/2019 18:35
Regional Economic Outlook 2019 - East Africa
Case Study – June 2018 – Facilitating Geothermal Field Development Through Public-Private Partnerchips in Menengai - Kenya
11/01/2019 14:50
Case Study – June 2018 – Facilitating Geothermal Field Development Through Public-Private Partnerchips in Menengai - Kenya
East Africa Economic Outlook 2018
12/03/2018 13:36
East Africa Economic Outlook 2018
The <em>East Africa Economic Outlook </em>reviews economic performance in 2017 and forecasts the next two years by highlighting the region’s key drivers of growth, opportunities, and challenges. It covers major macroeconomic developments in the region’s 13 countries and discusses structural issues affecting future growth, poverty, and inequality. It also presents in part II a synopsis of manufacturing activity in the region, drawing on a previous study of seven of the region’s countries. The outlook selects manufacturing as the sector to cover due to its potential to drive future growth and employment in the subregion. Economic growth in East Africa was a robust 5.9 percent in 2017 and is forecast to persist in 2018 and 2019. It would have been even higher, had it not been for political instability in the region’s fragile states. The service sector is generally the main driver of East Africa’s growth as agriculture, which has for a longtime played a leading role, is receding. Services grew 12.4 percent in 2017, compared with 12.0 percent for industry and 7.1 percent for agriculture. The mineral and industrial sectors’ role in driving growth is also increasing. On the demand side, household consumption is the main driver of growth, followed by public investment in infrastructure, mineral exploration, and construction.Read more
Working Paper 275 - Illicit Financial Flows and Political Institutions in Kenya
01/08/2017 09:17
Working Paper 275 - Illicit Financial Flows and Political Institutions in Kenya

Categories: Kenya

Working Paper 226 - Aid Unpredictability and Economic Growth in Kenya
12/08/2015 09:48
Working Paper 226 - Aid Unpredictability and Economic Growth in Kenya

Categories: Kenya

East Africa Quarterly Bulletin - Fourth Quarter 2014
24/04/2015 14:21
East Africa Quarterly Bulletin - Fourth Quarter 2014
Kenya - Peer Review of National Accounts - December 2014
18/12/2014 10:24
Kenya - Peer Review of National Accounts - December 2014

Categories: Kenya

AfDB Partner of Choice for East Africa - EARC Report 2014
08/10/2014 12:27
AfDB Partner of Choice for East Africa - EARC Report 2014
East Africa Quarterly Bulletin - Second Quarter 2014
02/10/2014 12:01
East Africa Quarterly Bulletin - Second Quarter 2014
East Africa Quarterly Bulletin - First Quarter 2014
09/06/2014 13:38
East Africa Quarterly Bulletin - First Quarter 2014
East Africa Quarterly Bulletin - Fourth Quarter 2013
02/04/2014 10:09
East Africa Quarterly Bulletin - Fourth Quarter 2013
East Africa Quarterly Bulletin - Third Quarter 2013
22/11/2013 10:18
East Africa Quarterly Bulletin - Third Quarter 2013
Economic Brief - African Housing Dynamics Lessons from the Kenyan Market
23/09/2013 10:18
Economic Brief - African Housing Dynamics Lessons from the Kenyan Market
East Africa Quarterly Bulletin - Second Quarter 2013
28/08/2013 12:44
East Africa Quarterly Bulletin - Second Quarter 2013
East Africa Quarterly Bulletin - First Quarter 2013
06/06/2013 13:17
East Africa Quarterly Bulletin - First Quarter 2013
Economic Brief - State of Infrastructure in East Africa
23/04/2013 14:28
Economic Brief - State of Infrastructure in East Africa
East Africa Quarterly Bulletin - Fourth Quarter 2012
04/04/2013 15:41
East Africa Quarterly Bulletin - Fourth Quarter 2012
East Africa Quarterly Bulletin - Third Quarter 2012
04/04/2013 15:36
East Africa Quarterly Bulletin - Third Quarter 2012
East Africa Quarterly Bulletin - Second Quarter 2012
18/09/2012 09:05
East Africa Quarterly Bulletin - Second Quarter 2012
Working Paper 151 - The Dynamics of Inflation in Ethiopia and Kenya
08/09/2012 23:00
Working Paper 151 - The Dynamics of Inflation in Ethiopia and Kenya
Ethiopia and Kenya have experienced strong economic growth during the last decade. However inflation, which was thought to be under control, reached 40 per cent in Ethiopia and 20 per cent in Kenya during 2011. The rise of inflation in Ethiopia and Kenya was not an isolated event; other African countries also experienced increased inflation. There are many potential causes for these increases, but recent swings in international food and energy prices are likely to have affected inflation in countries that depend on agricultural production and imported energy. Yet, there is no consensus on the causes of the rise in inflation: a common view is that expansionary monetary policy, primarily due to large government expenditures, is the main cause, possibly in combination with negative domestic food supply shocks. This paper presents an econometric analysis of the main drivers of inflation in Ethiopia and Kenya during the last decade. The approach is to apply vector error correction models to different sub-sections of the economies, which in the end are combined into a single inflation equation for each country. The data is monthly and spans 1999:11 to 2010:05 for Ethiopia and 1999:01 to 2011:11 for Kenya.&nbsp; &nbsp; The contribution of this paper is that it takes into account key sources behind the increase in inflation. There are, in principal, three potential drivers of inflation. The first is excess supply of real money balances. This can be caused by expansionary monetary policy or through central bank financing of government bonds. The second is external (imported) inflation and its effect on domestic prices: rapid surges in international food and energy prices are likely to spill over into domestic prices. The third is domestic supply shocks that create deviations between the current output and the optimal long-run growth path. In developing countries, such as Ethiopia and Kenya, agricultural supply shocks can create large disturbances to the domestic economy and inflation rates.&nbsp; &nbsp; Our approach is to investigate these three sources separately for each country; first by identifying deviations from long-run equilibrium relations and then bringing the results together in one model of consumer price inflation. For each of the three sub-sectors we formulate vector autoregressive models to test for long-run economic relations. After identifying long-run relations, we use single-equation error correction models to empirically determine the sources of inflation. Our models embed different theoretical propositions through the inclusion of the estimates of deviations from long-run equilibrium relations. This procedure allows us to test various hypotheses concerning the sources of inflation. Two key variables are agricultural production and GDP. Since they are not available at a monthly frequency, we interpolate yearly and quarterly observations to monthly observations. The Hodrick-Prescott filters are used to separate short-run cycles from long-run trends in GDP and agricultural production. The outcome of interpolation is that we can measure trends and annual swings in output gaps (but not within-season changes) and their effects on inflation. To identify the role of money market imbalances we test for basic long-run money demand equations. There exists a long-run money demand expression for Ethiopia but we failed to estimate one for Kenya. Yet, excess money supply does not affect inflation in the final model. Foreign price shocks are investigated through testing for parity conditions between domestic price indices and world market food and energy price indices in local currency. For international food prices, there are strong effects on the inflation rates in both Ethiopia and Kenya. In Ethiopia there is a long-run relationship between the domestic consumer price index for cereals and world grain prices. In Kenya there is a long-run relationship between the domestic consumer price index for food and world food prices. We do not find a significant effect from international energy prices on local inflations rates. This is possibly because the impact is already captured by world food prices, or because the link between world and domestic energy prices is weak due to market regulation and market inefficiencies. Domestic food supply shocks are clearly important in Ethiopia, where large harvests reduce inflation through their effects on domestic food prices. The evidence for Kenya is not as strong, which probably is due to market integration: when the error correction term for world food prices is removed from the model for Kenya domestic food supply shocks become significant. Our results point to a lack of anchor for inflation in both countries, arising from clear and well-functioning monetary or exchange rate policies. This could be due to the manner in which the authorities have chosen to deal with inflationary shocks historically. In both countries there have been periods without firm policy responses. For example, in Kenya the monetary authorities seem to have expected that the commodity price increase in 2011 would soon revert and therefore delayed policy responses. Another possibility is that traditional monetary policy has little power, as might be the case in countries that lack well-functioning financial markets. For example, in Ethiopia bank-to-bank credit ceilings had to be introduced to rein in money supply as some banks had large excess reserves. The main messages of the study are that food price shocks are significant drivers of inflation and that improvements in monetary policy, and possibly financial sector reform, are required to reduce feedback effects and anchor inflation expectations. The differences between Ethiopia and Kenya should be acknowledged. Financial sector reform is needed in Ethiopia, since the monetary policy transmission mechanism is weak due to high concentration among banks and holdings of large excess reserves. In Kenya the Central Bank increased its policy interest rate sharply in late 2011, and the tight monetary policy seems to have reduced inflation, indicating that the monetary authorities have some clout.Read more
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