NCBA Economic Forum has projected the economy to grow up to 6% in 2024, supported by a rebound in the agriculture sector. They also predict the resilience of the services sector, and impact of Government measures aimed at stimulating growth in priority sectors of the economy including in agriculture and manufacturing sectors.
NCBA however, notes that the unprecedented cost of living pressures negatively impacting on household balance sheets will continue to push more people into economic challenges.
Speaking during the NCBA economic outlook briefing themed, 2024 Macroeconomic Outlook: Divergence Across economies and Sectors’, NCBA Bank Group Managing Director, Mr. John Gachora said despite the biting cost of living challenge, significant progress continues to be made noting that the Government has continued to make the necessary adjustments that will be required to restore more durable macroeconomic stability-which remains a key prerequisite for long-term growth.
“We have seen the government roll out significant fiscal adjustments with an outlined multi-step fiscal consolidation path anchored at a target deficit of 3% of GDP and a medium-term revenue strategy necessary to achieve long-term growth. With these “growth positive” adjustments, we now expect GDP to grow at 4.9% in 2023 and maintain an upward trend into 2024. Overall, therefore, we, remain quite optimistic on 2024 prospects,” Gachora.
Central Bank of Kenya (CBK) Deputy Governor Dr Susan Koech who was the chief guest , “Despite the global uncertainties, Kenya’s growth has remained strong and is expected to remain above the global and SSA averages in 2023 and 2024, pointing to the resilience and diversified nature of the economy. The economy grew by 4.8 percent in 2022, well above the sub-Saharan Africa region average growth of 4.0 percent and the global average of 3.5 percent. The CBK expects the economy to grow by 5.5 percent in 2023 and close to 6.0 percent in 2024.”
Dr Koech further noted that the overall inflation has since declined from a peak of 9.6 percent in October 2022 to 6.9 percent in October 2023, which is within CBK target range.
“The decline reflects the impact of monetary policy measures adopted by CBK, easing food prices attributed to favourable weather conditions, and the government measures to zero-rate key food imports and enhance food production through subsidy on fertilizer prices. Food inflation eased to 7.8 percent in October 2023 from a peak of 15.8 percent in October 2022. Fuel inflation remained elevated at 14.8 percent in October 2023, due to the recent increases in global oil prices and removal of unsustainable subsidies”, She added.
The GDP in Tanzania, Uganda and Rwanda is expected to grow by 6.1%, 5.7% and 7.0% respectively.
“For Kenyan enterprises with operations in the greater EAC markets, the strong economic performance across the East Africa markets should be good news for potential 2024 outcomes. More specifically for Kenya, though we expect the projected growth to come with pronounced divergence across the different economic sectors. We expect the services sector to register good performance in 2024. However, broad economic strain could see some pockets of the sector grow below their pre-COVID levels.,” Mr. Gachora.
Agricultural output is expected to expand by about 5.0% with Agri-export flows (including coffee, tea and horticultural crops) expected to remain within their long-term-average trend performance. However, this could surprise on either side given the risk of weather volatility.
The Manufacturing sector could remain weak at an annual growth of 2.6% given the sustained household budgetary strain, while the overall infrastructure spend by both the government and private sector will see low growth of 4.0% in the Construction sector.
NCBA noted that the Kenya’s economic growth path potentially faces several challenges including Foreign Exchange Pressure occasioned by weak shilling and low official FX reserves, Uncertain weather conditions & Persistently High Inflation, Geopolitical Risks characterized by heightened financial markets risks and Global commodity price volatility, as well as Fiscal Sustainability in regard to public debt service strain and further accumulation of pending bills.
“However, the government seems on course to honor its external public debt obligations in 2024. With an ongoing IMF program, Kenya is expected to benefit from improved market confidence into 2024,” NCBA concludes.
This year’s 8th edition of the forum was attended physically and online by over 1000 NCBA corporate customers drawn from various sectors including Manufacturing, Agriculture, among others. Key speakers included Central Bank of Kenya (CBK) Deputy Governor – Dr Susan Koech, Chairperson, Presidential Council of Economic Advisors – Dr David Ndii, CEO Institute of Economic Affairs – Kwame Owino, Executive Director Kenya institute of Public Policy and Research- Dr Rose Ngugi and Head of policy Research & advocacy , Kenya association of Manufacturers – Job Wanjohi..
NCBA Economic Forum was launched in January 2018 with the aim of bringing together the government and industry stakeholders for candid conversations meant to spark economic growth.