Inadequate rains in the last three years have pushed the economy to its knee.

This coupled with the aftershock of the global financial crisis have resulted in poor economic growth from a high of seven per cent in 2007 to 1.7 per cent last year.

Experts expect a shift that will realign the economy away from agriculture to other sectors.

Economic recovery is likely to take longer than predicted as unpredictable rain, subdued international commodity demand, and food shortage continue to dim emerging green shoots.

According to CFC Stanbic Financial Services, the economy is expected to register minimal growth for the last quarter of the year as key sectors are yet to recover.

"The economic and market outlook for the last quarter of 2009 will be sluggish as key sectors that underpin the Gross Domestic Product (GDP) such as agriculture and tourism remain underperforming hence reducing the overall rate of growth for the entire year," said Mr Judd Murigi, the Head of Research at CFC Stanbic Financial Services.

However, in its third quarter economic research note, CFC Stanbic acknowledges the subtle shift of key economic drivers from agriculture to other sectors such as trade, wholesale and retail, services, and telecommunications.

Other sectors that are becoming more critical to the economy include transport, building and construction and hotel and restaurants.

According to the government second quarter economic report, hotels and restaurants, construction, transport and communication, taxes on products and financial intermediation were the key drivers of the growth.

These sectors are expected to continue to pull the economy through even as recovery in agriculture, manufacturing and tourism remain the immediate critical lifeline to a better economy.

However, agriculture and forestry, manufacturing, electricity and water, and fishing recorded subdued growth for the first half of the year hence pushing the overall economy further down.

Given the dominant role of agriculture and manufacturing in the country's economic vein, the declining performance pulled down the economy to record a 2.1 per cent growth in the second quarter.

In the first quarter the economy grew by four per cent.

Going forward, market observers expect a shift that will realign the economy away from agriculture to the other sectors which will eventually provide a stable foundation to withstand future vagaries of weather.

Currently, agriculture accounts for 26 per cent of GDP and is largely dependent on favourable weather pattern.

Failure or inadequate rains in the last three years have pushed the economy to its knee.

This coupled with the aftershock of the global financial crisis have resulted in a hard landing of the economic growth from a high of seven per cent in 2007 to 1.7 per cent last year.

"The potential recovery of the agricultural sector has been tampered by the prolonged drought and the worldwide recession pegging back certain sub-sectors", said Mr Murigi.

However, the onset of the much anticipated rains is expected to result in increase of fast maturing food which will ease the pressure.

In addition, the economy is expected to receive a boost from the government Economic Stimulus programme.

The program which targets to spend Sh22 billion is expected to create multiplier effect hence positioning the economy for better growth next year.

Similarly, increase spend in infrastructural projects will increase cash flow in the economy subsequently rising demand for goods and services.

A sustainable economic recovery is pegged on financial players availing credit to the business community and households to bring around the economy.

However, Mr Murigi reckons that credit tightness from financial institutions due to the perceived heightened risk of default is constraining the economy from ramping up production and increasing consumption at the household level.

The continue adoption of risk averse practice by banks has been a constant source of friction between banks and the Central Bank of Kenya (CBK).

CBK in its latest push to prod banks to increase lending to the private sector and households lowered the Central Bank Rate (CBR) by 75 basis point to 7 per cent.

The move signals the need to relax the high credit prices hence allow businesses to borrow cheaply.

However, from previous occurrence market watchers are not expecting a major shift from the banks.

Banking players have cited high cost of doing business and rising default rate as reasons for charging a premium on credit.

"The banking industry is likely to continue to resist the drive to lower their charges even as the new rate is expected to ratchet up psychological pressure on banks," said Mr Murigi.