The recovery of the agriculture sector, growth in the tourism, real estate and manufacturing sectors will propel the economy to an average growth of between 5.7% to 5.9% in 2019, a Markets Outlook Report released by Cytonn Investments shows.
Cytonn Investment Senior Investment Analyst Caleb Mugendi said that the outlook for Kenya’s macroeconomic environment is positive, supported by expectations for strong economic growth at between 5.7%-5.9%, a stable currency, inflation rates within the government’s target, and stable interest rates in 2019.
Speaking on Monday at a Nairobi hotel, Mugendi said the conducive operating environment should support investments in the Equities market and Private Equity activity where there is a Positive outlook in both asset classes, owing to the attractive valuations.
“We also expect monetary policy to remain accommodative and political stability in 2019. However, worries about Kenya’s debt sustainability and the revenue collection capacity by the Kenya Revenue Authority (KRA) against its Budgetary targets, have led to a build-up in short term risks thus, our view is that investors should be biased towards Medium Term Fixed Income Instruments,” added Mugendi.
“Our outlook for Real Estate is neutral as the slowdown in demand for property persists amid increasing supply. We expect a positive performance in sectors like Mixed Use Development, Land and Hospitality and a negative performance in the Commercial Office sector and Listed Real Estate,” said Juster Kendi, a Research Analyst at Cytonn.
“In 2019, we expect the Real Estate sector performance to be shaped by focus on affordable housing, increased mortgage uptake and adoption of sustainable developments and technology. We note that the Real Estate sector is mainly constrained by high financing cost for both developers and off takers, and we expect the market to pick up should the interest rate cap be lifted or should the government establish other financing methods such as tapping into capital markets and incentives for the mortgage market,” added Kendi.