World Bank projects Kenya's economy to expand by 5.5 pct in 2018

NAIROBI, April 11 (Xinhua) -- The World Bank on Wednesday projected Kenya's economy to expand by 5.5 percent in 2018, compared to an estimated 4.8 percent in the previous year.

Allen Dennis, Senior Economists at the World Bank, told a media briefing in Nairobi that Kenya's economy is rebounding after multiple headwinds dampened Gross Domestic Product (GDP) growth in 2017.

"GDP growth is projected to recover to 5.5 percent in 2018, and steadily rise to 6.1 percent by 2020," Dennis said during the release of the 17th edition of the Kenya Economic Update.

The publication dubbed Policy Options to Advance the Big 4-Unleashing Kenya's Private Sector to Drive Inclusive Growth and Accelerate Poverty Reduction, contains policy options that the East African nation can implement to further accelerate economic growth.

Dennis said economic growth decelerated to a five-year low in 2017 due to poor rains, slowdown in credit growth to the private sector as well as an election induced business activity slowdown.

He noted that in 2018, agricultural output is expected to rebound due to better rains, the dissipation of political uncertainty and the recovery in the global economy.

The Bretton Woods institution said that despite the projected rebound in economic activity, there exist some risks that could affect economic expansion in the future.

"On the domestic front, fiscal slippages leading to macroeconomic instability; the persistence of the interest rate cap into the medium term; and the potential for another drought could damper growth prospects," Dennis observed.

The World Bank also urged Kenya to deepen its policy reforms in order to further strengthen its economic growth.

The World Bank noted that boosting agricultural productivity and food security will require re-allocating more resources to agriculture as well as improving the efficiency of current spending in the sector.

According to the Kenya Economic Update, the country is in a strong position to make rapid progress to expand health coverage given the high level of political commitment and strong institutional foundations.

The report notes that attaining universal health coverage will however require some level of government subsidies.

The findings show that creating fiscal space to be able to support increased health coverage will require the re-doubling of efforts to rebuild fiscal buffers.

In order for Kenya to advance its manufacturing sector, the report urges the country to focus on competitiveness, capabilities and connectedness.

"The development of industrial enclaves with reliable infrastructure and procedures can help to address some of the structural bottlenecks that affect and help attract foreign direct investment," says the report. Enditem