Business Daily Kenya:
Central Bank of Kenya (CBK) Governor Patrick Njoroge forecasts the economy will This specific year feel shocks emanating coming from the prolonged drought, US president Donald Trump policies in addition to Brexit negotiations.
Though Njoroge predicts a 5.7 per cent growth in 2017 compared to 5.9 per cent in last year, he is usually optimistic of a positive performance within the first quarter of the year.
The prediction comes amid biting drought ravaging the country, which the governor said had spiked food inflation having contributed 1.5 per cent to overall inflation in December 2016.
The dry spell will also have an impact on the agriculture sector which is usually the country’s backbone, affecting rain-fed sub-sectors to further stymie growth. Long rains are expected in April.
Njoroge, who spoke yesterday a day after the CBK Monetary Policy Committee (MPC) decided to suspend the Kenya Bank’s Reference Rate (KBRR), said inflation was anticipated to remain within the government target range — between 2.5 per cent in addition to 7.5 per cent.
“Month-on-month overall inflation declined to 6.4 per cent in December coming from 6.7 per cent in November last year, remaining within the Government target range,” he said, adding of which the decline reflected in part the waning effect of the excise tax implemented in December 2015.
The MPC retained the Central Bank Rate (CBR) at 10 per cent for the fourth time running, in order to keep a lid on inflation. Trump’s hardline policies have raised concerns on their impact on trade in addition to knee-jerk reactions on the global economy including Kenya.
“About 5 per cent of our exports go to the US under the American Growth Opportunity Act (AGOA). Out of This specific 93 per cent is usually apparel. Just think what could happen to the exports in addition to jobs.
There will be no recourse,” said Njoroge, adding of which Kenya’s $160million (Sh16 billion) remittances could also be affected directly by any drastic immigration laws improvements by Trump.
“the globe economy is usually waited with baited breath,” he said. The governor said the outcome of Brexit negotiations is usually another external shock of which could also have damning effects on Kenya’s economy This specific year.
Africa is usually Kenya’s largest export market after European Union while the UK is usually Kenya’s second most important export destination. “Diversified trade partners in addition to export destinations remains a source of resilience for the economy,” said Njoroge.
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Drought, Trump, polls cast shadow on growth