Kenya to review growth target after rebasing-central bank chief

by Reuters 0

This is a move that led to a jump in annual growth rates, its central bank governor said on Monday.

Government officials put 2013’s gross domestic product at 53.4 billion US dollars – 25 per cent higher than previously stated – after updating the base year for its calculation.

Growth for 2013 was revised up to 5.7 per cent from 4.7 per cent. The higher growth trend was confirmed when the statistics office said the economy expanded by 5.8 per cent in the second quarter, up from 4.4 per cent in the first three months.

In September, Treasury Cabinet Secretary Henry Rotich said Kenya was expected to grow by between 5.3 per cent to 5.5 per cent in 2014, down from 5.8 per cent previously forecast.

“The National Treasury (finance ministry) will review the previous growth target that was based on the old GDP series and is expected to announce new targets,” Njuguna Ndung’u told Reuters.

Ndung’u said he expected the economy to remain resilient this year and in the medium-term mainly due to its diverse nature.

The 5.8 per cent expansion in the second quarter surprised many because it came about despite a slump in the tourism sector following a spate of attacks blamed on Islamists.

Output from the construction, manufacturing and financial services rose during the period.

“Various economic and financial indicators including cement and electricity production and consumption coupled with the sustained confidence in the economy suggest a continued pick-up in economic activity,” the central banker said.

He also cited increased foreign direct investment in transport and energy infrastructure, declining commercial lending rates and improvement in the management of spending by new local government units called counties.