Kenya’s Gross Domestic Product (GDP) is projected to recover to 5.3% in 2021, says NCBA Economic Outlook report.
The report by NCBA Group attributes this growth to increased activity in education (32%), construction (7.3%), ICT (7.7%), health (6.0%) and agriculture (4.0%) sectors.
According to the report, some upside will stem from a low base and therefore the multiplier effect on incomes could be comparatively low.
The report further cites that vaccination remains a major policy imperative in achieving strong, sustainable, and inclusive growth which, subject to vaccine availability, could enhance confidence later in the year.
According to John Gachora, Group Managing Director, NCBA Bank: “We see prospects for growth vary widely across sectors depending on the degree of exposure to the pandemic, scope for adaptability and policy support. Covid-19 vaccination will undoubtedly remain the main economic policy for sustained recovery, complemented by interventions from government and the Central Bank.”
Even then, the report notes that the government may only achieve a vaccination coverage of 7.5% of the population this year, assuming vaccine production and distribution improves significantly in the second half.
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In the meantime, the country will be subject to episodes of lockdowns although this may be clustered.
To this end, “….the start-stop economic scenarios occasioned by the pandemic may keep economic growth below the country’s potential. We are glad that the government allocated KES 14.3Bn towards vaccination. This may enhance coverage and confidence in the latter quarters of the year, subject to vaccine availability,” noted Mr. Gachora.
“To complement and further support the government, the bank continues to collaborate with the government and other players through the Credit Guarantee Scheme in order to enhance access to credit by MSMEs, providing some cushion against the pandemic aftershocks,” noted Mr. Gachora.
“From the rigorous analysis and findings by our Economist, growth expectations could swing between 7.6% on a more optimistic scenario and 3.2% on a worst case. This reflects the persistent uncertainty presented by the pandemic and underscores the need for flexibility and continued support from the government and the central bank,” concluded Mr. Gachora.
Other economic sectors that are expected to register slow growth include – transport and storage, manufacturing, wholesale, and retail recording 0.7%, 1.6%, 2.5% respectively.
The report also predicts the country may not achieve herd immunity until 2023 at the earliest. This may sustain the pandemic related uncertainties.