10 January 2013

Kenya: Treasury Predicts 5.6 Percent Growth for Kenya

The Ministry of Finance has predicted a 5.6 percent economic growth in the year 2013 up from about 5 percent in 2012.

Senior Economist at the Ministry Dennis Muganga said this will be mainly due growth in the agricultural sector following favourable weather conditions.

"Looking at the rains that continue, and the agricultural sector being one of the critical sectors in our country, we believe that the production this year will be much better than it was last year," Muganga told Capital FM Business, referring to this year's Budget Policy Statement.

Muganga added that there will also be increased investment opportunities due to the coming in of the county governments.

Other sectors according to the Treasury that are also expected to contribute to the year's growth include manufacturing and construction.

He however said the major risk to the foreseen growth is the weakening of the global economic growth, ruling out the coming general elections being one of the risks as expected by many.

"The slowdown in the European community is a threat. The slowdown in their growth affects us because if you look at our exports like flowers, go to Europe and a few other parts of the world. So this slow growth worldwide is one of the risks we have highlighted," he added.

The Treasury also projects that the current account deficit will start narrowing down to 5.4 percent of Gross domestic product (GDP) by 2015, after widening to over 10 percent last year due to increased imports.

"I know we have always been faced by the challenge of importing almost everything from foreign countries but we look forward to coming up with policies, that will help us increase productions locally," Muganga said.

Currently, Kenya's economic growth is still below the 10 percent which was expected by 2012 in line with the Vision 2030 goals.

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