Rédaction Africa Links 24 with Kenyans.co.ke
Published on 2024-02-29 10:17:49
Allianz Trade, a global organization operating in Paris, recently released a statement highlighting the factors influencing Kenya’s economic growth in 2024. The company projected that Kenya’s Gross Domestic Product (GDP) is expected to maintain a growth rate of slightly above 5 per cent in 2024, continuing the positive trend observed in 2023. This growth is primarily attributed to the strong performance in sectors such as agriculture, tourism (with a notable increase in tourist arrivals by 31 per cent), and overall service industries.
While the overall economic outlook appears favorable, Allianz Trade also identified specific challenges that could potentially impede this growth trajectory. One significant concern is the impact of rising global food and energy prices, along with regional factors that contribute to inflationary pressures within the country. The company highlighted limitations in infrastructure, purchasing power, and supply dependencies as key regional peculiarities affecting Kenya’s inflation dynamics.
Despite these challenges, Allianz Trade anticipates a gradual moderation of inflation in 2024. However, the company emphasized that the persistent increase in inflation rates could exacerbate existing socio-economic disparities within the population. Data from the Kenya Bureau of Statistics (KNBS) showed that inflation stood at 6.9 per cent in January 2024, up from 6.6 per cent in the previous month.
Another obstacle to sustained economic growth is the issue of public debt sustainability, which has become a focal point for President William Ruto’s administration. A recent review by the International Monetary Fund (IMF) affirmed that Kenya’s public debt remains sustainable, albeit with high overall and external risk ratings for debt distress. The IMF report acknowledged the positive impact of fiscal consolidation efforts under the IMF-supported program on Kenya’s debt dynamics.
Furthermore, Allianz Trade highlighted political risks as a significant factor that could influence Kenya’s economic prospects. The company noted that systemic political risks in the country are elevated due to social inequality, corruption, and security concerns, including potential spillovers from neighboring conflicts in Sudan, Ethiopia, and Somalia. These internal and external political factors create uncertainties that could impact investor confidence and overall economic stability.
Overall, while Kenya’s economic growth prospects for 2024 are positive, there are challenges that need to be addressed to ensure sustained and inclusive development. By closely monitoring key factors such as inflation, public debt sustainability, and political stability, policymakers can mitigate risks and foster a conducive environment for economic progress. Allianz Trade’s insights provide valuable perspectives for stakeholders seeking to navigate the evolving economic landscape in Kenya.
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