Nairobi — The negative growth in the agricultural sector poses the greatest risk to the Kenya's economic recovery even as projections for 2010 reflect optimism.

Fund managers and economic experts are projecting a better year with economic growth rate of between 3 and 4.5 per cent.

In its Africa market review, Standard Bank, which trades in Kenya as Stanbic, says it expects 3.4 per cent growth rate in 2010 but says agriculture remains the key risk to hitting the target.

"The risk to GDP remains the agricultural sector, which declined 3.5 per cent year on year in third quarter of 2009," says Stephen Bailey-Smith, Head of Research in charge of Africa at the Standard Bank, South Africa.

The sector entered the negative growth territory in third quarter of 2007 after the failure of short rainfalls.

Severe drought that has persisted since and the disruption caused by the January 2008 post election violence has subdued the sector, which contributes to about quarter of the country's wealth.

The bank picks out tourism as one of the key drivers of the 2010 growth given that the sector is currently experiencing one of its best growth momentum at 44.4 per cent.

"The positive momentum in tourism is likely to persist during 2010," Mr Smith says.

Also playing a crucial role will be foreign investors trooping into the country in search of better return for their funds, especially in the government bond market.

"We expect that global investment inflows will pick up swifter than the government envisages, assisting the government investment spending effort," he adds.

Increased spending given the low inflation rates and increased remittances are also expected to support growth.

The bank has however scaled down its projection for 2009 to 2.6 per cent from high of 3.3 per cent after the economy returned a flat growth rate in third quarter.