Kenya’s economy is likely to expand 5.8% in 2014 after below-target growth of 5.1% last year, the Ministry of Finance said today.The economy faces risks such as weak growth in advanced economies that could affect exports and tourism, as well as public spending pressures such as public sector wages and interest rate payments, the ministry said in a statement. The government’s forecast is higher than the World Bank’s latest outlook for growth of 5.1% this year in Kenya, which would leave East Africa’s biggest economy lagging those of its neighbours.
“Growth is expected to pick up gradually across most sectors,” the ministry said in a presentation on the economy, projecting 7% growth in 2017. The ministry said in November it expected the economy to grow 5.6% in 2013. The budget deficit in the fiscal year starting in July is likely to be 5.9% of gross domestic product, the ministry said, down from 7.9% targeted in the current year to the end of June. Government spending in 2014/2015 is projected at 1.52 trillion shillings – or 32.9% of GDP – from a previously forecast 1.47 trillion shillings, the ministry said.
Kenya’s government expects revenues next fiscal year of 1.17 trillion shillings, or 25.3% of GDP. The ministry said the central bank will remain focused on reducing annual inflation to 5% and keeping it there. The central bank kept its main interest rate on hold on Tuesday citing steady inflation, which eased to 7.15% in December from 7.36% the month before.