The World Bank predicted on Wednesday that Kenya‘s economy will expand at a slightly higher rate this year, supported by a rebound in the crucial agricultural sector.
The bank predicted that the country’s economy will grow by 5.0% in 2023, up from 4.8% in 2018, in its most recent biannual Kenya Economic Update report.
After two years of crippling drought, several farming areas have just had adequate rainfall, which might increase productivity and lower inflationary pressure.
The World Bank noted various risks to the growth outlook, including any fresh global shocks that would reduce demand for exports.
The report’s authors said they anticipate Kenya to manage the rising public debt repayments that have put strain on the country’s budget.
“Though the debt remains at high risk of distress, it remains sustainable,” said Naomi Mathenge, a senior economist at the bank and one of the report’s authors.
She added that the administration of President William Ruto, which assumed power in September, has slowed down debt accumulation and looked for less expensive sources of funding from bilateral and multilateral lenders.
The World Bank predicted that total public debt will gradually decrease, from 67.4% of GDP by the end of 2022 to 64.8% at the end of this year.
In an effort to increase revenue, Ruto’s administration has suggested a number of tax increases that have sparked opposition. According to Mathenge, the additional taxes might reduce consumption.
According to the World Bank’s assessment, Kenya may convert the threat of climate change into an opportunity by enticing green investments from foreign firms that want to lessen the carbon footprint in their supply chains.
The bank claimed that because it generates less than 1% of the yearly worldwide emissions of greenhouse gases, it has greater opportunity to trade its carbon credits.