Kenyan economy seen growing at 4.2 pct in 2010


Kenya’s economy is seen growing by 4.2 % in 2010 and accelerating to 5.0 % in 2011, compared with an estimate of 2.5-3.0 % in 2009, boosted by recovery in tourism and agriculture, a Reuters poll of analysts showed today.

The 2011 GDP figure, a median of 10 economists and analysts polled, is the average growth Kenya saw in the five years to the start of 2008, before it was slashed by a bloody post-election crisis and the global economic downturn.

The forecast was in line with the government, which projects growth of nearly 4 % this year, and the World Bank, which sees growth at 3.5 %, but says it could reach 4 percent if there was enough rain.
“A modest economic growth rebound is forecast for Kenya this year on the back of a slow recovery in the global economy which will buoy tourism and export earnings and improve access to external financing,” said Thalma Corbett, chief economist at NKC Independent.

A Reuters poll in October showed Kenya’s economy growing by 2.45 % in 2009.

Economic output fell by 0.8 % on a seasonally adjusted basis in the third quarter from the second quarter of 2009. The economy grew by 1.7 % in 2008, versus 7.1 % in 2007.

Other analysts said political factors ahead of presidential and legislative elections in 2012 could present a challenge.
“Our forecasts for Kenya imply a relatively benign scenario on aggregate, though growth performance may remain below par due to weakness in the agricultural sector and pre-election uncertainties, particularly in 2011,” said Richard Segal of Knight Libertas.

Eight of those interviewed said they expected inflation to rise by the end of 2010.
“With inflation having declined considerably in 2009, the risks are to the upside as both global commodity prices and domestic demand recovers,” said Lisa Lewin of Business Monitor.

Kenya revised the method it uses to compute inflation and now uses a geometric mean instead of an arithmetic mean.

Headline inflation rose to 5.3 % in December from 5 % in November. It stood at 6.6 % in October, when the change was made, and would have stood at 17.5 % under the old method. The poll showed headline inflation standing at 6.4 % in 2010 and 6.2 % in 2011.

The yield on the 91-day Treasury bill was seen at 6.9 % by the end of 2010, and 7.0 % at the end of 2011, compared with a yield of 6.502 % at its latest auction.

The Kenyan shilling is also expected to strengthen to a median 73.50 shillings at the close of 2010, and to 71.30 at the end of 2011.

At 06h34 GMT, commercial banks quoted the local unit at 75.95/76.05, compared with 75.85/95 at Thursday’s close.