Nairobi — Majority of CEOs expect their companies to have muted growth in the second quarter of the year as the country's economic conditions remain largely unchanged, a new survey shows.

In the latest Central Bank of Kenya CEO survey, most respondents noted that the high cost of inputs notably electricity and farm inputs are expected to leave business activity essentially at the same level as in 2023 Q1.

"Nonetheless, increased government spending associated with the close of government financial year is expected to support business activity while seasonal factors may also support agriculture, transport and storage firms," the survey notes.

Firms in the agriculture sector expect that adequate rainfall should help to manage short-term risks even though purchase prices remain a big concern. Seasonal factors are also expected to support sales.

As for businesses in the manufacturing sector, they anticipate a decline in sales and production due to increasing energy and electricity costs as well as a weakening shilling.

"Firms in transport and storage anticipate a boost in demand/orders due to seasonal factors as do firms in the ICT sector. Nevertheless, purchase prices are expected to remain elevated for firms across all sectors," the survey stated.

The CEOs optimism was moderated by concerns over domestic inflation, the weakening Kenya Shilling, prolonged drought, and cost of credit.

Externally, firms highlighted global inflation, global recession, and energy prices as threats to their expansion.

The firms expect to mitigate these constraining factors through the management of costs and risks, diversification of their businesses, increased sales and marketing, and digitization of their operations.

"A stable macroeconomic environment, an enabling business environment and a stable Kenya Shilling were highlighted as factors that could strengthen firms' outlook in 2023," said the survey.