The World Bank said on Thursday that Kenya’s economic growth will slow to 5% next year from an estimated 5.5 percent this year as the recovery from the coronavirus pandemic loses momentum.
According to the bank’s Kenya Economic update report, a global economic downturn could also reduce demand for East Africa’s largest economy’s horticulture exports and tourist visits from advanced economies.
The bank stated, “On the domestic front, risks can emanate from fiscal slippages,” anticipating increased spending by President William Ruto’s administration.
According to the bank, Ruto came to power in September promising to reduce citizens’ high living costs, which could put pressure on the budget.
According to the report, increased spending could reduce the amount of credit offered to businesses and raise the debt of the government, with higher borrowing costs likely to exacerbate the situation.
Since May of this year, policymakers have raised the benchmark lending rate three times to stop inflation.
According to the World Bank, supported by increased private investments, growth is anticipated to increase to 5.3% in 2024.
As it recovered from the pandemic’s first contraction in nearly three decades the year before, Kenya’s economy experienced one of its fastest growth rates in 2021, growing at 7.5%.